Some entrepreneurs seek ironclad patent protection for their innovations after spending months or years advancing concepts from garage scribblings through meticulous prototyping into developed products. Entrepreneurs instinctively value intellectual property (IP) that separates ambitious startups from competitors who do not use IP, especially when the Patentee’s products begin to acquire marketplace momentum. However, misconceptions exist about the acquisition and enforcement of IP. There are realities relating to the costs of enforcement of IP. Debunking persistent myths helps the patent owner (Patentee) have reasonable patent expectations.

Myth 1: Patents Fully Prevent Competitor Copycats

Belief:  A strong patent will stop all competitors.

Reality: Patents exclude specific implementations (as defined in the claims) rather than generally keeping challengers at bay. Sometimes, imitators can slightly alter physical dimensions, functions, or process steps to get around the literal wording of the claims (design-arounds). Also, there are usually prior art references preventing the Patent Attorney from acquiring broad claims to cover various alternative designs. Therefore, Entrepreneurs cannot solely rely on patents to stop competitors from taking some of the Entrepreneur’s market share. Trademarks can protect the ‘Good Will,’ and the corporate identity the Entrepreneur has developed to distinguish their brands from other brands. Filing for copyright protection on authored works is also helpful. Contracts can also be useful in preventing sales of a product if the Parties are in a contractual relationship. Also, some aspects that are separate and different from the patented idea, such as the process of making the product or ways to tune it, can be kept as trade secrets.

Myth 2: Submitting Applications Guarantees Air-Tight Protection

Belief: Many Applicants believe that they will receive an issued patent once they submit a patent application.

Reality: It is an examination system. The Examiner searches prior art documents to determine which features have already been made public. The Applicant cannot receive patent protection on known aspects of an invention as defined in the filed application. There is no guarantee that an Applicant will receive an issued patent.

Applicants that file overbroad claims to protect a large subject matter area are rejected by the Examiner, citing prior art documents describing at least some of the features falling under the wording of the literal claim.

The claims that specifically describe the aspects invented by the Applicant and do not stray far from the actual invention will be allowed. The Applicant can obtain a limited-time monopoly on ‘… what he/she brought to the party!’

Myth 3: Simply Registering Patents Saves Capital Raising Hurdles

Belief:  If I obtain a patent on my idea, funding will be no problem.

Reality: Some investors value patents since they indicate the invention is new and non-obvious. Since the USPTO examines these before issuance, it is proof that a credible source officially vetted the invention. However, the Examiner is checking to see if the idea was done before or is obvious in view of what was done before. It does not provide any indication of commercial need. Most Investors are still interested in actual customer sales. So rather than wasting time filing numerous patents, spend some time making sales. These can be anything from the local flea market to Etsy to Amazon online.

Often, the Investors only care if the Entrepreneur can make sales, even at a loss. Some Investors do not care because the Entrepreneur has few resources and cannot mass-produce products. The small Entrepreneur also has little leverage over manufacturers to ‘take the cost’ out of the products. Cost reduction can be done by a larger Investor who can lean on the manufacturers to negotiate better costs per item and reduce actual manufacturing costs over time. Cost reduction should not be the focus of the small Entrepreneur.

Myth 4: International Rights Require Individual Country Filings

Belief: I must file in all countries where I want to protect my sales.

Reality: Sort of … A US Patent will provide patent protection in the 50 states and US Territories.

However, it can not be used to stop one from making, using, or selling your invention in another country, such as Canada. It can stop someone from importing into the US a product made elsewhere, such as Canada, that is covered by a US Patent. This process requires you to register your patent with the U.S. Customs and Border Protection under the U.S. Department of Homeland Security and file a Federal Trade Commission action.

If you want patent protection in foreign countries, several global patent treaties allow simultaneous filing in multiple countries. The Patent Cooperation Treaty (PCT) process is best known, which allows an applicant to reserve patent rights in 147 industrialized nations. It is a two-phase process in which patent requirements common to all contracting countries are prosecuted first in one of five international offices. Thirty months after the initial patent filing, the Applicant notifies the International Office of which countries he/she has selected for patent protection. A copy of the entire file that the International Office has accumulated is sent to the patent office of each selected country.

The PCT Process is cost-effective if the Applicant wants patent protection in more than four countries. Filing directly in each foreign country is usually more cost-effective for four or fewer countries.

Myth 5: Discussing Invention Ideas Necessitates Confidentiality Non-Disclosure Agreements

Belief:  We need a non-disclosure agreement (NDA) to bring in another person to complete our invention.

Reality: NDAs only generally indicate what is to be discussed and have proof problems when enforcing them in Court. A typical situation is when an Inventor has an idea, contacts a large manufacturer, and requests a meeting. At the meeting, the Inventor has a company representative sign an NDA. Once the NDA is signed, the Inventor discloses his/her idea to the representative.

After several months, the Inventor sees a product that he/she believes is based upon his/her idea. The Inventor contacts the manufacturer and indicates that they disclosed elements “a”, “b”, and “c” to the manufacturer at the meeting, and these elements are in the product.

The manufacturer responds that they did have a meeting, and the Inventor disclosed “a”, “b”, and “d”; not “a”, “b”, and “c”. The Inventor has little or no proof since the meeting was not recorded, and there is no transcript. This results in a losing position with no proof other than the statements of the two opposing parties.

It is best to file a Provisional or Non-provisional Patent application on the invention before contacting a manufacturer. Therefore, in the same scenario, the Inventor has a detailed description of the invention with figures officially held as evidence by the US Patent and Trademark Office. Now, there is no doubt as to the information that was disclosed.

Getting grounded on patent law truths allows Inventors to have realistic expectations of what protection they will receive from their IP and make decisions accordingly.

For help with your patent needs, feel free to contact Zale Law.

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