How to Protect Your Tech Before Funding

 How to Protect Your Tech Before Funding

Innovation Protection

We all know that talk is cheap. Unfortunately, most of the activities associated with starting and growing your small business are not. Patent protection is no exception. As such, it can be a struggle for new businesses to fund a patent program early on before the business is “mature” enough to obtain funding from venture capital or business loans.
Yet, this is the most critical time to protect a technology company’s key innovations through patents. Why? Because in the U.S., if there is a public disclosure, sale or offer for sale of an invention, it starts a one-year clock ticking. If at the end of that one year no patent application has been filed on the invention, the inventor loses his or her right to seek a patent on the invention.

Foreign Protection

What’s more, most foreign countries do not have any such one year “grace period”. As soon as you make the invention public, you immediately lose your rights to seek foreign patent protection. The resulting loss of patent rights can be devastating to a technology-based company. However, it’s hard to make money on technology you can’t tell your customers about.

Domestic Protection

If that wasn’t enough, the U.S. is now a “first to file” system (as are most all other countries), meaning the first inventor to file an application with the U.S. Patent and Trademark Office (USPTO) for the same invention gets the patent. So, delaying patent filings for budgetary constraints can lead to big problems.

Best Patent Option

What is a small technology company to do in this Catch-22 scenario where money is at its tightest, but your key innovations are at their greatest risk? The answer is to take a deep breath, and then take it it in steps. In an ideal world, your patent attorney (preferably, that’s us) would help you identify all of your potentially patentable inventions, and write up each one of them in a separate utility application early on. However, a utility application has to meet all of the USPTO’s numerous rules and regulations, which makes it a rather complex (and costly) document to prepare and file.

Provisional Patent

Yet, under U.S. patent law you can file a “provisional” patent application, which remains active for one year. So long as you file a utility application within that one year claiming the benefit of the provisional application filing date, your utility application is given the benefit of the earlier provisional filing date for everything disclosed in the provisional application.
A provisional “application” is really more of an invention disclosure document, as it does not have to meet all of the formal requirements of a utility application. This is helpful to small businesses as it can be prepared with less attorney time, and therefore up front costs. Accordingly, a thorough and complete provisional application can set you up to file a utility application a year down the road when you have had a chance to obtain more funding. Plus, a provisional application allows you to announce that you have a “patent pending”.
Nevertheless, a provisional filing strategy is not without its potential pitfalls, and should be undertaken with the guidance of an experienced patent attorney. When executed properly, however, it is an effective way to make sure the key innovation of a technology company is properly protected while still balancing all of the other things fighting for a slice of your small business budget.

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