This article series, a guide to an effective patent strategy, originally appeared in the March 2016 issue of Minnesota Physician and is reproduced here with permission.
In last week’s post, we covered initial considerations for physicians considering patent protection. At this point, you may be wondering why we haven’t talked about the actual patent application process. That’s because it is critical to have your overall patent strategy in place even before you file your first patent application, and that strategy must fit with your business plans. You want to be sure that your patent filing strategy matches your commercialization strategy and vice versa. Much also depends on your end goal for your invention. Your specific approach to IP protection will be influenced by whether you’re going to start a company, license your invention, or simply sell your IP rights outright to a third party.
Regardless of your specific strategy, you will need funding to get things off the ground. Will you fund the venture yourself, or target investors, such as private angel investors or an angel fund? If personal funds are not an option, then you will need to reach out to investors. Any chance of success with investors depends on an IP strategy that is tailored to address the concerns of those investors. Plus, communicating with investors leads to a situation in which you need to protect against any risks of disclosure. This situation is further complicated by the fact that some investors refuse to sign confidentiality agreements because it presents too great a risk for them. Keeping the end goal in mind will help you prepare for these types of contingencies.
Starting a company
If your goal is to start a company, your strategy may be to focus on keeping costs down while pursuing a slower-paced patent strategy. For example, it may make sense under this strategy to initially file a provisional patent application here in the United States. A provisional application is a low-cost mechanism for getting an effective filing date for your patent application that has a non-extendable 12-month pendency period and fewer requirements than a standard non-provisional patent application. The provisional application delays the filing of a non-provisional application by a year, thereby deferring some costs and the patent process while giving you the additional time to develop your technology, raise money, etc., prior to filing the more expensive non-provisional application (and any foreign applications).
In addition to lower upfront costs and more time to develop your technology, another advantage of the provisional application route is the speed of filing. If you are pushing to raise money while trying to keep costs down, the provisional application will ensure you get an application on file as quickly as possible with the least cost. This allows you to start having conversations with investors and other potential money sources without the previously discussed concerns about pre-filing disclosure.
Licensing your technology
Alternatively, your patent strategy may be different if your goal is to license or sell your technology to an existing company. In this case it may make sense to pursue a faster approach with greater upfront costs. From the perspective of a potential licensee or purchaser of your technology, the farther along you are in the patent process, the more valuable your patent portfolio. Thus, it makes sense to file a non-provisional patent application instead of a provisional. A non-provisional application starts the prosecution process—you must file a non-provisional in order to have your application examined and move towards getting a patent. The desire to get an issued patent as quickly as possible may very well outweigh the additional upfront costs associated with the non-provisional (vs. the provisional).
Your business plans will also influence the depth of any freedom-to-operate analysis that you may obtain. For example, if you are seeking investment from an angel fund or other sophisticated investor(s), it is highly likely that the investor will want to do a freedom to operate analysis. In that case, your own analysis does not need to be extensive or require a substantial outlay of money. Instead, if you’re hoping for a substantial investment in your venture, you can simply do a more preliminary analysis to confirm that there are no major “red flags” with respect to freedom to operate. On the other hand, if you’re planning to market and commercialize your own technology, then a more extensive freedom to operate analysis is required.