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Executive Summaries Mar 29, 2019

7 FAQ from Tech Startups

How to protect and leverage your intellectual property is often one of the first questions that come to mind when launching a tech startup, and for good reason. 

One form of intellectual property ("IP") that you should be concerned about in the early stages of your business is patents.

A patent is a monopoly conferred by the government which grants, to its owner, the exclusive right to make, use, and sell an invention. In other words, unless you have given permission (i.e., a license), no one else besides you can make, use, or sell your patented invention in a given territory. 

Here are the most frequently asked questions we encounter about patents, and the answers that could save you money, time and headaches.

Can my invention be protected by a patent?

Eligibility to patent protection may vary from one jurisdiction to another. Given the importance of the United States for tech startups, this article specifically focuses on U.S. patent law. Generally speaking, in order to be patentable in the United States, the invention must fall within one of four specific categories. These include a process, a machine, a manufacture, and a composition of matter.

In order to fall within the categories of “machine, manufacture, or composition of matter,” the invention must be tangible. Meanwhile, the “process” category includes intangible inventions. Some examples of a process include a process of manufacturing, a method of processing information by computers (also known as “software patents”), or a method of conducting business (also known as “business method patents”). 

Why should I invest money in a patent?

Obtaining patent protection is a big expense for a young company. Still, there are many benefits to strategically developing a patent portfolio early on. As with any business decision, such an investment should be made in a way that maximizes the odds of a return on investment. Working with business-minded patent professionals will help you increase those odds.

Typically, a patent, when well prepared, may prevent competitors from copying your invention and gaining market share from its commercialisation. This may often not be applicable to small organizations, such as startups, as their financial resources to file patent infringement lawsuits are limited. In many instances, building your product and accessing the market as quickly as possible is likely to be your best defence. 

Having said that, as startups mature into larger organizations, having a portfolio of strategic patent assets is key in maintaining higher margins, reducing competition, and/or deterring competitors from suing for patent infringement. Investing in patents sooner rather than later can therefore help an early stage technology company lay the foundations for a long-term competitive edge.

Does my invention meet the necessary criteria to obtain a patent? 

Generally speaking, providing that the subject matter is eligible for patent protection, a patent can only be granted for an invention that is novel and unobvious. In other words, a patent cannot be granted for a technology that is already publicly known, or that only differs from a previous technology by obvious modifications.

I told my friend about my invention before filing a patent application - is it still possible for me to obtain a patent? 

It depends. Canada and the U.S. allow a one-year grace period following public disclosure to file a patent application covering the disclosed invention. After one year, the invention might be considered part of the public domain and may no longer be “novel”.

However, some jurisdictions (such as Europe and China) are more stringent and require “absolute novelty” of the invention, which means that any public disclosure by any person (including the applicant) before filing the application might make it impossible to obtain a patent.

For example, if you have disclosed your invention on a crowdfunding platform, you might benefit from the one-year grace period to file a patent application in Canada and in the U.S., but you might be precluded from doing so in other jurisdictions such as Europe and China. As a result, a competitor could potentially freely copy and sell your invention in those countries. 

When should I file a patent application?

An ounce of precaution truly is worth a pound of cure. Once the invention is set, before making any public disclosure, you should meet with a patent agent to discuss a proper course of action to protect your invention. If some disclosure is absolutely necessary, ensure that they sign a confidentiality agreement or nondisclosure agreement (commonly known as CDA or NDA) in place.

Is there such thing as an international patent? 

No. Patent protection is jurisdiction-specific. In other words, a Canadian patent does not prevent someone from making and selling your invention outside of Canada. This is why it’s important to strategically identify the countries in which patent protection is to be obtained. 

What is a Patent Cooperation Treaty (PCT) application? 

A PCT application is a single application which secures your rights in other countries for a given period of time (typically 30 months from the date of the filing). During that time period, you can choose to pursue patent protection in each of those countries.

A PCT application can be a good tool for startups. For example, if you have developed a new technology but you are unsure where you will be selling in the upcoming years, or where your eventual partner will be located, you can file a PCT application. This will maintain your rights to file in several jurisdictions in the future without having to pay the fees associated with filing the patent application in each country individually. 

For more information on patents, contact our team of patent specialists.

 

 

Would you like to grow your startup?

Apply for the BCF Imagine program! BCF Imagine is the gathering of five strategic teams from the Firm - Business and Technology, Venture Capital, Taxation, Intellectual Property and Mergers and Acquisitions - supported by our sector specialists in Litigation, Labour Law and Business Immigration - who put their talent and their experience together to propel innovative companies from here. The startup team dedicated to this program supports innovative companies in the various aspects related to the launch of their activities. Find out more about our BCF Imagine program.

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