“When engineering companies aren’t prepared to effectively protect inventions, the losses can be devastating and costly.”
Too often, engineering companies are in such a race to come up with the next big thing that they forget to consider the crucial step following their grand discoveries or inventions: patent protection. If a business is willing to spend years developing products and a considerable amount of money marketing, then it only makes sense to follow through and protect the accomplishment. Yet, many (unintentionally) don’t. Below are five risky ways tech companies often jeopardize their intellectual property rights, sometimes even before a product has been developed.
- Lack of knowledge about what’s already in the market. The launch of your team’s best idea is forthcoming, and many late nights have been sacrificed to ensure all the quality plans have been laid out, all the software triple tested, and all the documentation rolled out (well, mostly), and everyone’s bubbling with excitement because nothing like this has been done before. Whispers of similar technologies created have been heard, but you’ve done something different, so your product stands out. Well, as it turns out, the patent office doesn’t believe it is different enough, and someone else has done what you’ve done! They just used it in a different industry. All these details matter, and when engineering companies aren’t prepared, the losses can be devastating and costly. Not only will you be facing stiff competition if the other company is selling to similar customers as you, but if they’ve obtained patent protection, you could be sued for infringement on their product and forced to pay them for profiting from their legally protected invention. Ouch.
- Failure to include ownership clauses in contracts. In many industries, a project cannot be completed without the help of multiple entities—vendors, subcontractors, and other suppliers. The role of a company within a contract can vary, which is why a contract should be reviewed a dozen times over before anyone signs. This doesn’t apply to only external parties, either. Engineers and designers hold the golden ideas, but when they are the employees of the brand, they may not be receiving royalties on inventions they created if they were forced to sign inventorship/intellectual property waivers during their on-boarding process with the company. These waivers typically state that the employee understands any idea they develop during their time with the company, and with the company’s resources and teams, belong to the company, and the company only. A company that hires a subcontractor to assist with a project will likely include a clause that states they retain all ownership over the final product, including data rights. It may not be in large, bold letters, but it could be in the fine print or embedded in referenced documents or links. Conversely, sometimes companies are in such a hurry to order a part or hire a service that they do not bother with such clauses and end up with an intellectual property disagreement, or lawsuit, on their hands down the line. Whether you are the customer or the client, it’s essential to have someone read contracts with a fine-tooth comb each time you are considering entering into a partnership with another entity, especially if there is a lot of money and intellectual property at stake.
- Not asking the right questions. The more you know about your company’s niche in the marketplace, the more you can start to position yourself for the best patent protection. Ask your corporate counsel or IP lawyer about international rights, and which countries your technology would be most useful (and therefore, more successful) in, and then you can file accordingly. The systems in Europe and Asia are different than the United States’, but you can select certain countries, and if you know the industry is booming for your specific technology, you might want to rush. If you are not necessarily in a hurry, perhaps you can focus more on development of another product. Then, pursue international patent rights in another year when the company’s budget is more flexible. On the other hand, maybe you don’t want a patent at all, because the manufacturing or design process of your invention will then become public record, and the process is more valuable to your company. That’s a big decision. Knowing your options is crucial, but you need to ask questions of your lawyer, your engineering teams, and if applicable, your accounting department.
- Not wanting to invest the money. When a company isn’t willing to hire an expert patent attorney to guide them through important decisions, they risk losing even more money in the long run. In the American patent system, the first to file is the first to be granted patent protection, which means that you can invent the same thing as someone else, but if they beat you to the patent office, they have priority. Even if you have someone who works in your company who has passed the patent bar exam and is well aware of how the USPTO works, if they are not well trained on how to construct claims in order to define the invention, then the patent issued may allow a competitor to still claim part of the invention, basically on a technicality. If nothing else, having someone who isn’t efficient managing your patent portfolio will end up costing thousands of extra dollars on the back end because mistakes or corrections cause the relay between you and the USPTO to take longer than necessary—from not filling out forms properly to a typo in an equation or a severe error in what is being claimed. Some things simply aren’t worth the penny pinching, and patent protection is one of them.
- Patent trolls. While engineering companies can take preventative measures to cover all their bases, the most challenging area of patent protection to navigate is prosecution by so-called patent trolls. Patent trolls buy patents for the sole purpose of using them in litigation against other companies in hopes of gaining settlement rewards. While not everyone agrees that patent trolls are actually a problem, and many tech companies have faced lawsuits and come out on the other side, the costs can be significant.
For startups and companies without corporate representation, patent protection can be tricky to navigate, but inventions are valuable property and once stolen could be financially crippling to litigate. Therefore, do your homework, and don’t take shortcuts when it comes to patent protection.