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Starting Up: Protecting Your Products
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May 19, 2008
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IN 2004, JENNIFER MCKINLEY and her business partner dreamt up an idea to sell yoga mats festooned with digital images such as snakes in lush grass and handprints in shag carpeting. Wanting to safeguard their vision, the duo hired an attorney to patent the idea a full year before they launched Plank, their yoga accessories shop in Boston.
"We didn't want to take any chances," McKinley says. Having a patent, she says, "creates a level of confidence that a competitor isn't going to come along and copy our idea." And most retailers, also concerned about copycats, like products to carry patents. "They want to know that another competitor won't come along," she says.
A patent is a legal document allowing inventor-entrepreneurs to prevent competitors from making, using or selling their invention for a set period of time — typically, 20 years from the filing date. If a copycat does appear, you can sue for damages and bar future infringement. In more amicable circumstances, you can license an invention to a third party, say, a large manufacturer and receive royalties. Or, you can sell the patent outright.
To be sure, patents are not necessary for every start-up entrepreneur with an innovative idea or product. And the cost is steep: Filing and legal costs typically range from $2,000 to $10,000, depending on the complexity of the invention. So before you seek one, it's wise to ask the following questions:
A better strategy might be to get a provisional patent until you get a manufacturer on board. With a provisional patent, which lasts for one year, you can say "patent pending" without having to jump through the same hoops that a regular patent requires, says Krauss. Additionally, the cost is far less. Filing a provisional patent costs just over $100, while a regular patent costs more than $1,100, plus attorney fees. Note that provisional patents, however, do not offer any protection from infringement.
For some businesses, being the first out of the gate can sometimes stifle competition long enough to create a barrier to entry, which can then act as an unofficial patent, says Lisa Haile, an intellectual property attorney at DLA Piper in San Diego. If you've created something entirely new that's difficult to replicate, you might forgo the patent. But if your industry is teaming with competitors and "you're spending millions of dollars developing a drug, for example, you have to weigh the market," she says.
Or, perhaps you have patentable idea but you want to keep it secret. A patent application, which is published for anyone and everyone to see, includes a detailed description of the product, a sketch and a detailed account of how to recreate it. You might instead consider protecting that process or formula as a trade secret so that it remains confidential. (Read more on trade secrets and other ways to protect ideas here.)
For her part, McKinley estimates that between application and attorney fees and having to seek outside expertise from scientists at Massachusetts Institute of Technology, Plank's U.S. patent, which is still pending after three years, cost more than $30,000. Was it worth it? The patent certainly has been valuable as a barrier to competitors, she says. But it hasn't translated directly into sales. "Customers don't really care about the patent," she says.
Haile, the San Diego attorney, points out that patenting some things doesn't make sense. For example, "business-method patents have gotten mixed reviews," she says. Since these types of patents typically protect internal business processes (for example, a company's communication system), determining whether someone's violated a patent is next to impossible. Since being able to monitor your intellectual property is key to a patent's effectiveness, "when you get a patent, you have to think about how you want to enforce it," she says. For this reason, Haile says that patenting end products (such as medicines or a game), typically offers the best value, as they're generally easier to monitor.
To avoid applying for a previously patented product, Pressman recommends performing a free patent search at Google Patent Search. Unlike the U.S. Patent and Trademark Office which keeps patents as far back as 1976, Google has patents archived from as far back as 1836.
You could also pay for a patent check. According to Haile, whose firm performs such a service, a world-wide patent search costs between $2,000 to $5,000. Also, keep in mind that if you intend to sell a product in other countries, the standards for determining patents in those countries may differ from the U.S.
"We didn't want to take any chances," McKinley says. Having a patent, she says, "creates a level of confidence that a competitor isn't going to come along and copy our idea." And most retailers, also concerned about copycats, like products to carry patents. "They want to know that another competitor won't come along," she says.
A patent is a legal document allowing inventor-entrepreneurs to prevent competitors from making, using or selling their invention for a set period of time — typically, 20 years from the filing date. If a copycat does appear, you can sue for damages and bar future infringement. In more amicable circumstances, you can license an invention to a third party, say, a large manufacturer and receive royalties. Or, you can sell the patent outright.
To be sure, patents are not necessary for every start-up entrepreneur with an innovative idea or product. And the cost is steep: Filing and legal costs typically range from $2,000 to $10,000, depending on the complexity of the invention. So before you seek one, it's wise to ask the following questions:
Do I really need a patent?
If you plan to, say, develop a product just to license it to a bigger company, getting a full-fledged patent may not the best way to go, says Andrew Krauss, co-founder of inventRight, a firm in Mountain View, Calif., that helps inventors bring products to market. "Nine out of 10 times when you start talking to a manufacturer, you're going to have to change something," he says.A better strategy might be to get a provisional patent until you get a manufacturer on board. With a provisional patent, which lasts for one year, you can say "patent pending" without having to jump through the same hoops that a regular patent requires, says Krauss. Additionally, the cost is far less. Filing a provisional patent costs just over $100, while a regular patent costs more than $1,100, plus attorney fees. Note that provisional patents, however, do not offer any protection from infringement.
For some businesses, being the first out of the gate can sometimes stifle competition long enough to create a barrier to entry, which can then act as an unofficial patent, says Lisa Haile, an intellectual property attorney at DLA Piper in San Diego. If you've created something entirely new that's difficult to replicate, you might forgo the patent. But if your industry is teaming with competitors and "you're spending millions of dollars developing a drug, for example, you have to weigh the market," she says.
Or, perhaps you have patentable idea but you want to keep it secret. A patent application, which is published for anyone and everyone to see, includes a detailed description of the product, a sketch and a detailed account of how to recreate it. You might instead consider protecting that process or formula as a trade secret so that it remains confidential. (Read more on trade secrets and other ways to protect ideas here.)
Is it worth it?
You can patent just about anything, from the look of a product, as McKinley did, to items used in manufacturing (such as buttons and belts) to business processes and formulas. But no matter what you end up patenting, simply obtaining one doesn't "guarantee" profits. It's important to consider what kind of return you can expect on your investment — although that can be tricky to measure.For her part, McKinley estimates that between application and attorney fees and having to seek outside expertise from scientists at Massachusetts Institute of Technology, Plank's U.S. patent, which is still pending after three years, cost more than $30,000. Was it worth it? The patent certainly has been valuable as a barrier to competitors, she says. But it hasn't translated directly into sales. "Customers don't really care about the patent," she says.
Haile, the San Diego attorney, points out that patenting some things doesn't make sense. For example, "business-method patents have gotten mixed reviews," she says. Since these types of patents typically protect internal business processes (for example, a company's communication system), determining whether someone's violated a patent is next to impossible. Since being able to monitor your intellectual property is key to a patent's effectiveness, "when you get a patent, you have to think about how you want to enforce it," she says. For this reason, Haile says that patenting end products (such as medicines or a game), typically offers the best value, as they're generally easier to monitor.
Will it pass?
After you decide what to patent, make sure it qualifies. David Pressman, a patent attorney in San Francisco, and author of Nolo's "Patent It Yourself," says that for an invention or discovery to be patented in the U.S. it must be both "novel and non-obvious." If what you want to patent isn't new, for example, your patent could be denied and you may be out a few thousand dollars in attorney fees.To avoid applying for a previously patented product, Pressman recommends performing a free patent search at Google Patent Search. Unlike the U.S. Patent and Trademark Office which keeps patents as far back as 1976, Google has patents archived from as far back as 1836.
You could also pay for a patent check. According to Haile, whose firm performs such a service, a world-wide patent search costs between $2,000 to $5,000. Also, keep in mind that if you intend to sell a product in other countries, the standards for determining patents in those countries may differ from the U.S.
Other recent Starting Up columns:
• Starting Up: Launching in Tough Times
• Starting Up: Solo Health Care
("Starting Up," a weekly column written by Diana Ransom for smSmallBiz.com, follows entrepreneurs through the early stages of launching a business. Write to her at dransom@smartmoney.com.)
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