In the 25 years I’ve spent working with hundreds of companies in Canada and abroad, one of the most frequently asked questions I hear is “How do I patent my intellectual property [IP]?” This, along with “What are the costs?”; “What are the benefits?”; and, frankly, “Why bother in the first place?”
Other quite reasonable questions I get on the subject include “Won’t a bigger company just sue us back to the Stone Age?” and “Why should I spend money patenting when I could hire more staff?” Well, I believe the decision to protect your IP with patents is one of the most critical decisions you’ll ever make.
The truth is I think you may be surprised with my answers to these questions. Although there have been several high-profile examples in the past few years of patent litigations involving “David and Goliath” clients, I have found, time after time, that the “bigger guys” almost never steal IP. They are far happier to license and partner rather than trying to reverse-engineer or work around someone else’s patents. Frankly, it is much easier to license the technology or product from the little company than to try to produce a knock-off of someone else’s product and throw all kinds of time, money and effort into a homegrown Version 2.0. Licensing generally is cheaper and almost always faster to market. And, trust me, big companies look at patents as a base measure for partnership. Not holding patents in these discussions greatly weakens the little company’s chances of getting bought out.
Given that Canada is so focused on technology development and the fact that we produce thousands of engineers and scientists annually, I think a brief discussion on taking a balanced approach to protecting IP is both timely and relevant. I also would like to note that although my advice here is intended primarily for a typical tech startup, it can apply to any company that has a prospect of international expansion or acquisition.
Although there are many reasons not to invest time, effort and expense in the patent process, in my opinion, not to do at least a basic U.S. and international IP-protection exercise could greatly weaken your non-domestic sales and partnering efforts. In time, not doing so also could reduce your chances of making a strong exit through acquisition. I define a basic patent exercise as an initial legal review of competitive technologies, products and companies in the international region in which you intend to sell. If it appears that no one is close to your offering, then it might be worth undertaking an initial or “provisional” patent.
There are three critical areas you need to consider: where to protect your IP, what to protect and how much to spend.
Where to protect
Before you launch your product in the domestic marketplace or before you seek any kind of profile that might tip off foreign companies to the existence of your product, I strongly recommend that you determine where you think your product is likely to find paying customers—even if you don’t intend to sell there immediately.