Patent Filing Strategy - Tips & Tensions

Introduction

Technological innovation is at an all-time high, with companies constantly competing to create next-generation technology and products. Media coverage of technology and intellectual property issues is ever-prevalent and companies are keen to be seen as innovative leaders in their field.

With such competition, the technology sector has recognised the important role that intellectual property plays within business. However, launching a successful product involves more than merely developing a cutting edge technology, creating an attractive design and implementing an effective marketing strategy: identifying your IP and knowing when, where and how to protect it has become a key component of the overall business plan for successful technology companies.

There are various forms of intellectual property and protection, including: patents, trademarks, designs, copyrights, and trade secrets. Which form of protection is applicable depends on what has been created and how it is intended to be used. For new technology, patents are often the best way to protect the core invention and, as such, companies are eager to file applications; but filing and pursuing patent applications can also be very costly and time consuming.

In order to make important decisions in regards to patent filing, creating a successful strategy is crucial: it involves understanding the company's overall business goals and aligning them with a number of key financial, organisational, environmental, human and legal factors.

This article will look at these various factors and consider how they influence the development and execution of the patent filing strategy. Looking at the influencers, we will examine the considerations that must be given when developing an effective strategy that best supports an organisation's present and future business objectives, without adding unnecessary costs.

NB. This article is written primarily with a focus on the commercial and business aspects of filing decisions, as opposed to the legal aspects involved in patent application and prosecution.

Financial & Commercial Tensions

There are many factors that must be considered when creating a patent filing strategy. These factors interact with each other to create tensions and trade-offs in the decision making process. They can be categorised as follows:

Organisational Factors

Type Of Business

Filing decisions may vary considerably based on the size or maturity of the organisation. For example, a start-up or an SME may be more constrained by the financial factors while a larger, more mature blue chip organisation may be predominantly influenced by the external or environmental factors, such as: competition, technology lifecycle etc.

Business Strategy / Policy

Business policy usually influences the filing strategy by defining a broad set of guidelines, formulated after an analysis of all internal and external factors affecting an organisation's business objectives, operations, and plans. The policy may, at times, even override other factors in the decision-making process: for example, a company's policy may be to stay clear of aggressive litigation for fear of retaliation; or a company's strategy may be to file patents in the technology areas or geographies where competitors are or are not filing. Companies may also make filing decisions based on the exploitation strategy for the patented technology or the relationship they have with their suppliers or customers. As seen in recent times, organisations may encourage increased patent filings ahead of an Initial Public Offering (IPO), or other funding event, in order to re-assure investors.

Business Objectives / Goals

Before determining when and where to file a patent, a company should consider the following:

How the company intends to use the patent: Whether the patent is relevant to the company's current or future line of products Whether the portfolio will be used offensively or defensively: Offensively: to assert against others, to licence as revenue generation or to prevent a competitor launching similar products Defensively: for example, to be used to protect the company from competitors asserting their own patents Whether the company has the means to pursue or assert the patent in due course It is important that all departments understand the potential commercial and business value of any invention whilst keeping in mind the larger goals and objectives of the business.

Need For Funding

The value of patents is increasingly being recognised by the financial community. Patents owned by start-ups are becoming an important part of the selection criteria for venture capitalists, and portfolios have been shown to positively affect a start-up's ability to attract investment. Most recently, companies are using their patent portfolios as part of the safeguard against which debt financing can be secured. Having a significant patent portfolio can also contribute positively to a company's reputation in the market, where sometimes the size of a patent portfolio may be seen as a measure of innovation. A company that foresees the need for future funding may choose to place emphasis on their patent filing strategy. The value of a portfolio is also likely to be under considerable scrutiny in an exit event, such as a merger or acquisition.

IP Education

Education is important across multiple departments to ensure understanding and cooperation, in regards to seeking patent protection. As well as a basic knowledge, employees should be familiar with the portfolio and be educated about identification of patentable inventions and how to manage situations that are specifically related to the company's intellectual property, such as:

The creation of a new product The suggestion of an improvement to a product by a customer Collaborating with partners to develop products Alleged infringement of the company's products by a third party. If employees are not appropriately educated, patent rights may be lost and costly mistakes could be made. For example, failure of employees to understand that a new improvement to a product could be patentable can result in the loss of foreign and domestic patent rights. Filing a patent application after a public disclosure (e.g. offer for sale, seminar, digital publication) has been made, will result in the loss of most foreign patent rights.

Invention Management Programme

It is essential that employees know what to do when they invent something, or simply to recognise that they have done so and are not underestimating the invention's potential. A sound IP management programme should mentor employees throughout the process of invention capture by encouraging them to disclose their ideas, providing a simple process on how and where to submit new concepts and assist in conducting prior art searches and the like. An IP management programme will enable the organisation to successfully capture all new intellectual property, thus protecting their investment in innovation. Further, the programme should enable an effective filing process for an organisation. It is never a 'one size fits all' approach and rarely is it appropriate to simply patent everything, everywhere, immediately. A 'tiered' approach can help organisations in building a cost-effective...