Startups have many options for protecting the intellectual property on which their product or service is based, but they also face risks of losing the opportunity to protect themselves. Early stage companies, like the ones we spoke with at a recent hack/reduce event, are particularly vulnerable to well-funded and well-informed companies exploiting their lack of intellectual property protection and launching competitive software that uses strikingly similar technology, systems or processes.
Before unveiling new software, whether it’s doing a small demo for select early customers, announcing a private beta or launching a fully tested commercial product, startups should take these steps to protect their most valuable information:
1. Identify opportunities for keeping intellectual property confidential
Information that is not publicly available or discernable through use of a product or service may be considered a trade secret. However, simply keeping such information from the public is often not sufficient to claim trade secret protection. Startups should restrict access to information they want to be able to claim as a trade secret by, for example, using security measures such as encryption, log files, and password locks. Any public disclosure of these assets can nullify trade secret status and the data may no longer be protected. As such, trade secret protection is not as useful for products where the public can understand the underlying functions, such as software that is easy to reverse engineer or that uses industry standard techniques.
2. Understand the patent landscape before meeting a lawyer
While there are numerous online resources and lawyers that help startups through the patent process, startups can help themselves by first understanding the patent activity in their field. To gauge whether an invention may be ripe for patent protection, startups should consider the three questions that determine patent eligibility:
- Is the subject matter eligible? (35 U.S.C. 101)
- Is the subject matter novel? (35 U.S.C. 102)
- Is the subject matter non-obvious? (35 U.S.C. 103)
Eligible subject matter is currently a hot topic in software patent law, and current cases such as CLS Bank International v. Alice Corp illustrate that judges are still struggling to determine what constitutes patent eligible subject matter. Greater clarification is expected when the Supreme Court rules on this case later this year, but the current approach is that software that embodies an innovative idea and consists of more than the execution of merely mental functions is generally patentable. You can read more about this in an earlier blog post by Goodwin Procter associate Suhrid Wadekar, Protecting Ideas Expressed as Software.
3. Don’t forget to file early
The America Invents Act was fully implemented on March 16, 2013, converting the U.S. patent law from “first-to-invent” to a “first inventor-to-file” system. This means that startups interested in protecting their intellectual property are best served by filing for a patent as soon as they have sufficiently developed their invention and can described the invention in such terms that others in the field would be able to practice the invention. The America Invents Act also provides startups the opportunity to challenge other patents through a number of mechanisms that they do not believe should have been issued. For example, a “post-grant review” may be requested within nine months of the issuance of a patent, and an inter partes review may be sought after the nine month period.
If your startup has questions about protecting intellectual property, you’re welcome to contact us at https://www.foundersworkbench.com/contact-us/.