Trade Secrets: What a startup needs to know about patents

By Michael Williams

When you have invented something new, designed a product with a novel appearance or use a distinctive sign to distinguish your goods or services in the marketplace, then the law allows you to register your rights to protect you from imitators. One of these is by using patents, which are described in this article. In the second article to be published later by The Chilli, we will cover trademarks.

Patents are increasingly being used as a business tool, not only by multinationals, but also by SME and startup companies. For startup businesses, a patent may be the only real asset that will attract investors until sales have commenced. And a patent buys time for small and medium size businesses to establish a toehold in the market, preventing competitors from copying an invention.

Patents can be granted for a huge range of new products, devices or equipment, or new manufacturing, treatment or operating processes. These include electronics, semiconductors, telecommunications, computer and medical equipment and virtually anything with a “technical character”. Patents can be granted in all important industrialised nations and can provide up to 20 years exclusivity in an invention. During this period, competitors cannot make, sell, offer to sell, use, keep or import a product which has been claimed by the patent. There is no need for copying. A patent will prevent others using an invention even if it was created independently.

Keep the patent secret
It is important not to divulge the invention before filing an application for patent protection since disclosure will generally result in the patent being invalid. Care should be taken to ensure conditions of strict confidence are maintained if it is necessary to disclose information to others, during discussions with potential investors or product demonstrations for example.

A great deal of time, money and effort can be invested in research and development to arrive at a feasible invention and the possibility of protecting it should be considered before giving it freely to competitors. The expense of obtaining a patent is relatively small in comparison with the investment in the research and development of an invention. The expense is usually more than justified to protect the investment and it can be offset by the additional income that derives from owning the exclusive rights to the invention.

During the lifetime of the patent, significant income can be generated if you are the only supplier able to meet a requirement for a particular product or process. If there is sufficient demand, additional income can also be generated by licensing the patent to other parties in return for a proportion of the income that they, in turn, generate from selling the patented product or process. Hence, if the invention is successful in the market place, there is potential to recoup the costs involved in obtaining a patent many times over.

It is possible to defer a lot of these costs, which can be helpful to start-up businesses.

Obtaining patent protection
Once you have assessed whether your invention is likely to be new and has the required “technical character”, the first step in obtaining a patent is to prepare a written specification. This must include a clear, complete description of your invention, referring to technical drawings where appropriate, and one or more "claims" that define the invention in words. The claims are important because, when the patent is granted, they will set out the scope of the monopoly. In general, if another party does something that falls within the scope of the words of these claims, without your consent, then you have a legal right to stop them.

For a UK patent, the specification is filed at the UK Patent Office (UKPO). Patents can only be granted if the invention is new and inventive (i.e. not obvious) over earlier information that has been made public in any way, anywhere in the world. After 12 months, the UKPO will set a series of deadlines which must be met if the application is to continue. The UKPO will search public information for any documents disclosing your invention. If the UKPO search reveals that the invention has already been made available to the public, you can discontinue the application whilst ensuring that its contents stay secret. Otherwise, the application will normally be published within 18 months of filing. The UKPO will then issue an examination report containing any objections to your application. It is possible to amend the claims to try to overcome the examiner’s objections. In some cases, two or more examination reports may be issued before a final decision is reached. In any case, a decision must be reached within 4.5 years of the filing date.

Patent protection outside the UK
A UK patent will only give you the right to stop others from using your invention in the UK. If you want similar rights outside the UK then you must obtain corresponding patents in all those territories. The cost of patents increases in proportion to the number of territories where protection is sought and it is necessary to give serious consideration to the list of countries in which you have a real commercial interest. The majority of competitors can be excluded by strategically seeking patents in the particular territories where manufacture is based (e.g. semiconductors in South Korea, Japan and US) and/or in the territories where the main markets are. A patent also covers importation of infringing articles into that territory, even if the article is made in a country where there is no patent.

For more information about patents, visit: http://www.patent.gov.uk/

Next issue: what you need to know about trade marks and designs protection.

Michael Williams is a patent attorney with the firm fJ Cleveland.

Any comments on this article? Email the editor at Editor@TheChilli.com

© Chilli Publishing Ltd 2004

13OCT2004