When it comes to intellectual property everyone seems to have their own opinion of how it all works. Industrial design as a profession plays a crucial role in the development and maintenance of patents and it is in your financial interest and in the justice of being recognised for your works to have a solid understanding of intellectual property. In this two part article I will explain the different types of protection available in the development of products and the requirement criteria for each protection type. I will then touch briefly on international product development and patent writing tips. But most importantly at the end I will go over business strategies and the worthwhileness of patents. One must keep in mind that this article makes reference to IP laws in the United Kingdom and Australia, which is similar to most western countries like mainland Europe and the USA. But each country may have slight differences when it comes to managing intellectual property.
Article by Martin Gibson – Twitter – 14.01.2010
Actually writing and documenting a patent is a relatively easy process. There are just a couple of things you must consider when generating your patent application. Firstly you must think about the level of detail and scope you want to cover in your application. It is wise to be relatively detailed in a patent so it is taken seriously, so don’t try patenting the whole internet because of a new website coding platform you developed. Yet you don’t want to be too detailed that it limits the scope of your own application and gives loopholes for competitors to take advantage of. For example if you define your patent as using a particularly type of wire, then a competitor could bypass your patent by just using a different type of wire that may achieve the same result thus rendering your patent useless. However if you decided to state this energy transfer as not coming from a ‘wire’ but through an electronic or digital transmission your patent now covers more scope. This is why patents are sometimes so difficult to read fluently! It is important that your application is neat and tidy and easy to understand. The better you communicate in your application the greater any kind of potential litigation in the future can be avoided. Good diagrams with effective annotations are key to effectively communicating in an application. One picture is worth a million not a thousand words in a patent application.
There are two options available to turn a patent into a commercial enterprise. Much of it depends on who you are and your financial position and the risks your willing to take. It also depends on the resources you have and of course the subject matter and importance of the particular patent. There is the business start-up model, and then there is the licensing model, both of which have severe positives and negatives.
Starting your business based around your inventive product or service sounds like the greatest way for you to gain profit, but is also extremely risky (just think about the statistics about business failure within the first 3 years). Starting a business is not the best strategy for certain patents in some industries. For you to start a business based around a patent I think you and your product should be:
These checkboxes should be getting ticked if you are planning on starting a new business venture. But remember licensing to a large manufacture selling millions of units might earn you more money than you selling just hundreds of units on your own. Licensing is also quicker to bring your product to market and bears you no risk at all. If you are a serial inventor licensing maybe the best option to maintain your design lifestyle and not dedicate your whole world to your new business (new businesses take enormous amounts of personal time). You must ask yourself, do you have the industry knowledge and resources like distribution channels and supplier contacts to be able to compete with existing businesses? – Business that may consist of hundreds of employees and have stations around the globe.
Whenever considering any protection you must ask is the price of protection worth the risk of a competitor duplicating the idea? For many smaller businesses the idea of patenting many innovations that aren’t groundbreaking might seem economically unjustified. There is no definitive answer to this as it all depends on your particular circumstance. Some factors include: how fast paced the industry is around you? For example, what is the point of applying for 10 minor patents in a mobile phone when in 6 months time these patents might be completely obsolete? Sometimes using a go-to-market strategy which involves beating your competitor to the profitability punch is more worthwhile than spending the time and money on patents. However if you know that your competitor may be able to manipulate and profit from your idea in the long term to an extent greater than your own, a patent is then critical.
Sometimes adopting strong strategies through nondisclosire agreements and trade secrets is a more effective way of managing intellectual property risk. How do you control an employee who was key in your product innovation if he/she moves to a competitor? Who owns the design then? The ownership of these ideas should have been stated in the employment contract. If it isn’t stated in an employment contract the designer not the business owns the right to the idea. But even with an army of lawyers and legal contracts people still may disclose an idea to someone else. And if it was to be an employee who left your business, what on earth are you going to do about it? Sue them? And get what money from them? You will never fully be able to protect an idea so being wise in who you communicate to and the degree of the disclosure is imperative.
You must be realistic when evaluating the commercial worth a patent has. Don’t just patent a product because its unique or makes you look smart, do it for the money! Remember patents are like lottery tickets, only some of them ever make any money, but often the ones that make money make great financial rewards. For well established businesses where branding is a key identifying factor as to why people choose your product over another, trademarking is imperative for your business. Likewise with design registrations, if your product relies heavily on its aesthetic image, for example the iconic Coca Cola bottle shape then design registrations are a wise option to maintain your market position.
Unfortunately patents are only valid for individual countries. If you want to provide full IP protection you must apply for a patent not just where the product was designed or manufactured but every country you may want to sell to (yes think about all the money that would be spent on applications and the vast amount of paperwork). But remember if you have the prosperity to sell to so many countries often the patent expense is minuscule to prospective profit. Be weary however that some developing countries like China and India although they may have patent/copyright laws they often have very poor enforcement of their regulations and corruption and bribery are commonplace. A ‘copy-cat’ business maybe able to operate successfully for months or even years within China without being caught or halted.
Unfortunately there is no such thing as an international patent (maybe one day with the way globalisation is going) but there is the International Searching Authority (ISA) and the International Preliminary Examining Authority (IPEA) which collate patents in individual countries to see if there are any conflicts. You should apply to these international authorities because it signals your intent of registering your patent around the world and makes your patent easily discoverable and recognised. Applications to individual countries must be made separately to your national patent office, but often your national office may provide services for internationalising patents. It is good practice to apply for overseas patents within 12 months of your national patent application so you don’t jeopardise the legitimacy of your invention overseas. Patents are expensive, especially if a product has multiple patents and it is patented in several countries. There is a tonne of paperwork and administration involved, as well as annual renewals and of course there is a language barrier in many countries so all the patent documentation needs to be translated in its entirety. To forecast the worthwhileness of pursuing an international patent strategy you really need to estimate the market size and the potential sales volume in any given country and then decide whether it is worth patenting the design.
As well as providing security to your ideas, patents can also be used as a valuable marketing tool. When the word ‘patent’ is used in product advertising consumers get immediately excited. Many consumers take the notion that anything with a patent is cutting edge, very rare or extremely cool (which of course as designers we know that this may not necessarily be true). With that said, be proud of your patented technologies in your products, boast about them and exploit them as much as you can in all your advertising material. The reason the word patent is just so important in advertising is because when a seller says “using our patented locking mechanism it will take you half the time to achieve the desired result”. But what he/she is really saying is “you can only purchase this new locking mechanism at our company because we are the only business that legally can do so.”
Remember there is a strong correspondence between the fortune 500 companies and the amount of patent registerations made annually. So start innovating!
IP Australia – http://www.ipaustralia.gov.au/
Intellectual Property Office UK – http://www.ipo.gov.uk/
United States Patent and Trademark Office – http://www.uspto.gov/
Canadian Intellectual Property Office – http://www.cipo.ic.gc.ca