Choosing when to start the patent process is a critical decision for startups. Waiting too long can result in your patent rights being inadvertently forfeited, but filing too early can be a waste of precious capital that locks you into a timeline of costs that your company may not be prepared for.
The right time to file a patent application is ultimately based on a combination of business and legal factors, which unfortunately is why there is a lot of bad information out there when it comes to patents for startups. Admittedly, bad information sometimes even comes from well-meaning patent attorneys who don't understand the unique needs and life cycle of startups and who instead plan patent protection in a legal vacuum that fails to account for the business impact of patents.
This post walks you through the legal and business considerations for when to start the patent process and how to make a patent plan for your unique business.
How Do I Prevent Losing Any Patent Rights?
The most important legal consideration is that patent rights can be lost upon a first public disclosure, public use, or offer for sale of technology. In the United States, you have one year after these activities before your patent rights are forfeited, whereas in most foreign jurisdictions you immediately lose your patent rights upon a first public disclosure, public use, or offer for sale.
While foreign patent protection is not appropriate for all businesses, best practice is to preserve the option for foreign patents. For example, I have seen several early stage companies who initially forfeited foreign patent rights believing them be unnecessary, who then missed out on important investors or collaborators because foreign patent protection was critical to a potential deal. Accordingly, the first rule of patent planning is to at least file before you make any public disclosures, public uses, or offer for sale of technology you want to patent.
Should I File My Patent Application Immediately to Get the Earliest Possible Priority Date?
From a purely legal standpoint, it would seem to make sense to file a patent application as soon as possible. The United States is now a first-to-file jurisdiction like the rest of the world, so patent priority goes to the party that files their patent application first and not to the party that invents something first. Also, part of the patent examination process is a patent examiner determining whether your claimed invention is new and non-obvious in view of technology that was known before the filing date of your patent application.
Filing quickly could potentially get you a filing date before publications or similar products come out that could be used against you during the patent examination process. Accordingly, a natural inclination that many inventors have is to file a patent application immediately after conceiving an idea. However, from a business perspective, rushing and filing too soon is actually a terrible idea.
Should I Wait Until the Technology Has Developed to File a Patent Application?
It's counterintuitive, but waiting to file a patent application is almost always the best option instead of rushing to get an early filing date. The biggest consideration that eager inventors typically overlook is the large cost commitment that begins once you file your first patent application. For example, assuming you first file a provisional patent application (which is also typically the best choice for startups), this starts a one-year clock until your non-provisional patent application must be filed, and examination at the USPTO begins one to two years after that.
An initial provisional application can be filed to fit just about any budget because of flexible filing requirements, but the formal requirements of a non-provisional makes this application expensive, and the examination process afterwards is not cheap either. The deadline to start filing foreign patent applications is also a year from when the initial provisional patent application is filed and foreign applications can be even more expensive than the United States counterpart.
The takeaway here is that patent costs can start being in the tens of thousands of dollars within a year of when you file your initial patent application. This might sound like a long time, but for those of you who are familiar with startups, product development, finding investors, and getting traction with sales, you know the process always takes longer than expected and the product specifications often change frequently. Unfortunately, there is no way to defer hard patent deadlines, and not having enough capital to cover costs means that patent rights may be lost completely, technology is inadequately protected, or critical funds get diverted from other important business purposes. None of these are great options.
Rushing to file your first patent application can also be a huge waste of money. For example, I have worked with a few companies who insisted on filing patent applications when their product was just a general concept, but once they started developing a prototype and talking with customers and investors, the product completely pivoted and was nothing like the original idea. The original patent applications then became an unnecessary sunk cost or an ongoing liability for those who did not abandon them.
Also, waiting to file your first patent application as long as possible increases the quality of protection gained by an initial filing. For example, you only get priority for the details that are actually described in the patent application and filing a patent application on a broad initial idea typically has little value because the important product details have not been fleshed out yet, which are typically the key to patentability. Accordingly, it is typically best to develop a product as much as possible before filing a first patent application.
To summarize so far, you should wait to file your first patent application as long as possible, but be sure to file before a first public disclosure, public use, or offer for sale. However, there is one other event that should be a trigger for filing a patent application.
You Should File a Patent Application Before You Pitch to Investors
As discussed above, you start to forfeit important patent rights when you make a public disclosure, public use, or offer for sale of your technology. Naturally, if you are doing a pitch at a public event, where a recording could be publicly disseminated, you would want to file a patent application beforehand because these would be considered public disclosures. However, most investor pitches happen behind closed doors where there is at least implied confidentiality that makes these disclosures ones that don't forfeit patent rights. Regardless, filing a patent application before you meet with investors is critical.
First, being able to say that your product is "patent pending" in the United States and worldwide makes a huge difference for your pitch. (Note that an inexpensive initial provisional patent application can allow you to say this if you do it right). Investors love to see that you have an intellectual property strategy in place and are more likely to invest in a company that has the potential to get exclusivity in the market.
Also, going into a pitch with "patent pending" status allows you to safely talk openly with investors without having to worry about them stealing your idea because you have already established a priority date with a patent application. Investors can't evaluate your business if you are not willing or able to talk about your product freely and you will be pegged as an amateur if you try to get them to sign a non-disclosure agreement. Both will result in your company getting a polite "no thank you" and you might not even realize why.
The Bottom Line and Next Steps
Given these factors for filing and not filing a patent application, the best strategy for startups is typically to wait to file your first patent application as long as possible, but be sure to file before a first public disclosure, public use, offer for sale, or meeting with potential investors.
The next step is to talk with a patent attorney so you can craft an intellectual property strategy that fits your company and so you can be ready to file a patent application when the time is right. Also, you want to make sure you know what activities actually constitute a public disclosure, public use, or offer for sale, so you don't accidently lose patent rights when you don't intend to.
Luckily, an initial strategy consultation with a patent attorney is typically free and drafting and filing an initial provisional patent application to get "patent pending" status and start the patent process is well within the budget of just about any startup.
Dylan O. Adams is partner and patent attorney at Davis Wright Tremaine, practicing out of its Seattle office. His clients include startups, Shark Tank businesses, and Fortune 100 tech companies. He is the author of the best-selling book Patents Demystified, an Insider's Guide to Protecting Ideas and Inventions, which is used at top universities like Harvard, Stanford, and M.I.T. Dylan has also been featured as patent expert on CNBC's hit show "The Profit" with Marcus Lemonis.
