Inside Tips on IP: What Entrepreneurs Need to Know

“Innovation is a discipline that can be both taught and honed,” is one of the mottos behind the Fogarty Institute educational workshop series. These sessions are designed to inspire both early-stage and seasoned entrepreneurs, but also give them insight into the best practices that will help them succeed as they take their ventures to the next level.

In our latest seminar, an accomplished group of experts dove into a topic that is critical to all medtech startups — intellectual property (IP). Without this cornerstone, even the best companies won’t achieve their goal of getting to the next phase where their technology reaches and helps patients.

We had the privilege of hosting two members of the United States Patent and Trademark Office (USPTO) — Steve Koziol, recently named assistant regional director of the USPTO’s Silicon Valley regional office; Neveen Abel-Jalil, lead supervisory patent examiner at USPTO’s Silicon Valley regional office; and Michael Stout, supervisory patent examiner at USPTO’s Silicon Valley regional office. The group was rounded out by experienced IP lawyers Amy Embert, principal at Ascenda Law Group; Brent Sokol, partner at Jones Day; and Earl (Eb) Bright, president at ExploraMed.

IP has a major effect on entrepreneurs – and our economy

Steve kicked off the workshop with an overview of the different IP types and then delved into best practices for reaping the rewards of a well-executed IP strategy. Ensuing panel discussions covered case studies, as well as an overview of the services and resources of the USPTO, the federal agency that is responsible for granting patents and registered trademarks.

The overarching message was that entrepreneurs – even at very early stages – need to realize the importance of IP and how and when to develop an IP portfolio.

First, Steve shared a big-picture view of IP to quantify its valuable effect on the overall U.S. economy. According to the 2015 USPTO study, The Bright Side of Patents:

• There are nearly 30 million IP-intensive jobs.
• The average worker in IP-intensive industries sees nearly a 50 percent wage gain.
• IP-intensive industries account for nearly 40 percent share of the total U.S. GDP.
• IP-intensive industries add $6.6 trillion in value to the overall U.S. economy.
• Licensing of IP rights accounts for $115 billion in revenue.

The impact of IP on startups is equally important, finds the same paper: In fact, there is a 51 percent increase in sales growth and 36 percent increased ability to hire, measured from the dates of a startup obtaining its first patent to five years down the road.

Of course, that doesn’t mean that there aren’t roadblocks, but filing early on accelerates the learning process, as companies can more quickly see the mistakes and how to correct them, Steve noted. And, those who file early typically file subsequent patents.

Participating in the IP process can not only improve sales growth and hiring, but also contributes to an increase in obtaining VC funding – a 53 percent increase in probability of VC funding, not only through a first round, but also a 47 percent increase in second round funding.

Having IP also gives companies a 153 percent increase in probability of an IPO and an 84 percent increase in an IPO or acquisition.

IP strategy as a business strategy

The numbers are clear: IP must be a priority for early-stage startups as it is attractive to investors and those who may want to acquire a company, in addition to deterring infringement lawsuits. When determining a strategy, entrepreneurs need to assess IP assets, research the competition, determine the best way to protect IP, and then use all that data to develop a plan.

That plan might include determining which types of IP are most relevant to the specific business, whether it’s patents, trademarks and service marks, copyrights or trade secrets, which are becoming increasingly popular in medical diagnostics and software areas. While each has tradeoffs, it’s an important factor for startups to weigh.

Ensuring success with patents

Getting a patent offers a 20-year term to take advantage of IP protection, which encourages entrepreneurs to innovate and commercialize since they have a limited number of years to capitalize on an invention. However, it’s important to note that to enforce patent rights globally, companies must pursue patents in those individual countries, making it important to consider the countries where there may be potential acquirers and where their sites and manufacturers are located.

From the time a patent application is filed, it can take from two to five years to get an issued patent. If on the fence about filing an application, a “provisional application” is a low-cost option, at less than $100, to preserve the date of the invention. It establishes the applicant as the inventor as of the date the application is filed and buys one year to decide whether to file a complete application. That’s key because the United States has a “First Inventor to File” system, so it is important to establish the earliest filing day possible.

Finally, Steve shared insight on patent “claims,” which are at the heart of the patent grant. He covered the art of filing a claim that is neither overly narrow and specific, which has little value, or too broad, which is likely to be rejected by the patent examiner.

Using resources to ease the process

As Steve and the team shared, it’s important to get things right from the beginning: It is worth the time and the financial investment or it gets more expensive later.

The USPTO office offers a number of resources that range from webinars and “Lunch & Learn” programs to one-on-one assistance, a 20-minute slot with a patent specialist for either an in-person or virtual visit. While patent specialists cannot provide legal or business advice, they can discuss different forms of IP, the patent application process, prior art searches and other elements.

They also offer universal public work stations that provide public access to patent and trademark databases; an IP Awareness Assessment, which allows entrepreneurs to determine their IP potential; and a pro bono patent program, which matches financially under-resourced inventors and small businesses with registered patent attorneys. To speed the application process, the Track One prioritized examination tool is available.

Resources

Helpline: 1-800-PTO-9199
Utility Patent Application Guide: www.uspto.gov/patents/resources/types/utility.jsp
Patent Process: www.uspto.gov/patents/process
Patent Search Guide: www.uspto.gov/patents/process/search
Trademark Assistance Center & Help Videos: www.uspto.gov/trademarks
IP Awareness Assessment Tool: www.uspto.gov/inventors/assessment
Inventor and Entrepreneur Resources: www.uspto.gov/inventors
Pro Se Assistance: www.uspto.gov/patents-getting-started/using-legal-services/pro-se-assistance-program
Micro Entity Limit: www.uspto.gov/patents/law/micro_entity.jsp
Patent Pro Bono help and video: www.uspto.gov/inventors/proseprobono
First Inventor to File: www.uspto.gov/aia_implementation/patents.jsp#heading-10
Law School Clinic Program: www.uspto.gov/learning-and-resources/ip-policy/public-information-about-practitioners/law-school-clinic-1

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