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This article originally appeared in the August 2011 editon of Entrepreneur Magazine.No entrepreneur wants to be the next Robert Kearns, the stubborn, hard-working inventor Greg Kinnear played in the 2008 film Flash of Genius. Kearns unwisely–or, perhaps, just unluckily–lost control of his revolutionary idea, the intermittent windshield wiper.
Unfortunately, many entrepreneurs may soon be facing Kearns’ fate.
In March, the U.S. Senate passed what lawyers and intellectual property experts call the most significant–and controversial–change in American patent law since the 1950s: The America Invents Act. America Invents is an attempt to streamline an imploding U.S. patent system. The U.S. Patent and Trademark Office now takes an average of 34 months to approve or deny a patent, with an active backlog of 715,461 patents, making many obsolete before they are granted. Specific details of the legislation are still being ironed out, but it is clear that big changes are coming in the way small firms will have to manage their intellectual property. The new law changes what makes an idea patentable or not, and the way others can challenge a new patent during the “post-grant review” process. And, most important, the act moves from a first-to-invent basis to a first-to-file basis, which rewards the first person to file for a patent instead of the first person to think of the idea behind the patent.
That combination of changes has sparked a debate as to whether the new rules bias the patent process toward big companies with pockets deep enough to patent early and challenge often and away from smaller firms with fewer resources.
“The America Invents Act does nothing to improve the U.S. patent system,” says Alexander Poltorak, chairman and CEO of Suffern, N.Y.-based General Patent Corporation, a patent licensing and enforcement firm. “In fact, the legislation actually weakens the patent system by making it easier for infringers to challenge the validity of a patent and forcing inventors, small businesses and universities–who may not be able to afford the cost of defending their patents–to abandon them.”
Others are less concerned about the burden the bill will place on small businesses, noting that those with the ability to manage their intellectual property properly will be rewarded.
“I do not see it being as big a change as it is being made out to be,” says David Pressman, a San Francisco-based patent attorney and author of the intellectual property textbook, Patent It Yourself. “The patent process still takes time and effort, and done well it will still work.”
Either way, it will take real smarts to avoid starring in your own version of Flash of Genius.
Here is what you need to know to manage your intellectual property in the strange new patent world.
Understand the best IP practices for your industry
Defending your intellectual property through patents and other tactics creates the legal underpinning necessary to safeguard your ideas and make sure other companies pay you for use of those ideas. However, building a strong IP defence is anything but simple: Acquiring even a basic patent can take up to six years, hundreds of hours of work and, according to industry insiders, $7,000 to $15,000 in attorney fees.
Before starting the process, it’s important to understand how your industry handles intellectual property. For example, products in biotech and telecommunications stay on the market for decades, which means startups in these fields need bulletproof patents from the get-go. But retail, consumer device and manufacturing firms have products that change every year or so. These industries are best served by filing late in the product-creation process, if at all, and may benefit from the use of IP tactics including trade secrets and confidentiality agreements.
“Once you realise that you control your business’ IP, then you can make it work for you, not the other way around,” says Ben Kaufman, founder and CEO of Quirky, a New York-based social consumer product development firm that crowdsources product development (see Innovators, page 24). “IP does not have to be the stuffy, lawyerly thing you think it is.”
Start the process early
No matter which IP strategy is right for your business, you have to plan, understand and execute that strategy from the beginning. If patenting early is best, search out a patent attorney during your firm’s early days. Already in business but don’t have patents for your valuable ideas? Get started now. Getting your IP house in order should never sit unattended at the bottom of your to-do list.
“When you have a big idea that you are taking to market, you do not want to be thinking about your patents deep in the engineering process,” says Ron Epstein, CEO of epicentre IP Group, a Redwood City, Calif.-based intellectual property management and licensing firm. “Trust me, I have been doing this for 20 years–by that time, you will have forgotten that big idea that got you there in the first place.”
Get the right IP person for your IP job
Once you’ve defined your strategy and goals, it’s time to hire the right IP support to manage your intellectual assets. Most companies turn to an attorney, patent agent or licensing firm. That person or firm–essentially your chief intellectual officer–should understand your industry, your company and your particular problems. The right IP pro listens, asks questions, makes suggestions and has a successful track record in your particular market. Remember, there are many beasts in the IP jungle: utility patents, design patents, patents for plant life and for industrial plants. An expert in one is not an expert in the other.
And that expert should also understand what having a good IP strategy can mean to a company’s overall health. “The well-developed patent portfolio definitely increases the number of choices a developing firm has,” says Murali Dharan, CEO of IPValue Management, a Mountain View, Calif.-based intellectual property development company that has earned more than $700 million for patent owners.
Consider the do-it-yourself option
As daunting as it may sound, developing and filing your own patents from scratch can make sense in today’s evolving patent landscape. Patent experts say it takes about 150 hours over several months, and then periodic work over several years, to patent your idea. But that time investment ensures that you fully understand the nitty-gritty of your business. Is your product original? Is it useful? Is it novel and not obvious to anybody with basic skills in the field? What is your competition doing in the space? And if your idea meets these requirements, is it really best served with a full patent, or would a trademark or trade secret be better?
If you have the patience–and the time–a carefully crafted DIY patent could be worth considering.
“Most people are just too lazy to spend the time or make the effort,” says author Pressman. “But really, anybody who can write can do it.”