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New Law – New Strategies: Five Things You Need to Know About the New Patent Laws that Affect Your Business (Monday, October 28, 2013)

Smart businesses know that intellectual property (IP) laws not only allow them to protect their ideas, but also allow them to extract value from these ideas to generate revenue. They understand that a successful IP strategy is not just about protecting their ideas, but is about creating leverage in the business model. Companies use these IP laws to protect and leverage products, services, and the branding of those products and services to drive revenue to the business.


A well developed IP strategy creates leverage against competitors who want to copy protected ideas, suppliers who want to use those ideas and venders who want to sell those ideas. This leverage can then be used to create barriers to competition, negotiate preferred pricing from suppliers and create strategic partnerships with vendors. An effective IP strategy may also allow a business to leverage their IP portfolio to access more desirable intellectual property from their competitors to open new markets for the business. Patent protection, for example, can create significant market barriers by creating monopolies around patented products.


Businesses looking for new ways to open and/or secure market positions should again look towards IP strategies as a tool to create or teardown market barriers. With the signing of the “America Invents Act,” significant changes in U.S. Patent Laws have come into effect. As these changes continue to be implemented, businesses need to reevaluate their current IP strategies.


1. Know the Business Model – Intellectual Property Laws Create Leverage From Protected Ideas


Understanding the business model is key to developing a successful IP Strategy. The goal of an IP strategy should be to support the business model by protecting ideas, services and products, as well as enabling a business owner to create leverage within the business model to generate revenue. Without a clear understanding of the forces acting on a business and driving revenue, developing an effective IP strategy that generates value to the business becomes impossible. Once the business model is understood, as well as its value proposition and the competitive forces that influence revenue, a business can begin to identify ideas that support the business model, protect those ideas and extract value from those ideas to drive revenue.


2. Know the Competition and Market – New Third Party Submissions and Re-Examinations Help to Clear Market Space


Businesses can create leverage over the competition by affecting competitor’s IP portfolios. Changes in the patent laws have now made it easier to participate in the patenting process by allowing third parties to submit prior art to the Patent Office. This allows businesses the opportunity to affect the protections sought by its competitors.


Understanding competition enables a company to effectively monitor patent filings and submit relevant art to the Patent Office that may prevent these competitors from obtaining patent protection. By doing so, this can clear space in the marketplace. In addition, businesses can now look to new patent re-examination procedures offered by the Patent Office to potentially invalidate or limit the scope of competitor’s patents, providing another opportunity to free market space for their new products.


3. File Early to Protect Ideas – “First Inventor to File” Provisions Are Now in Effect


For a business, protecting products and services is a core element of any IP strategy. Filing patent applications early in the development process has recently become significantly more important. In March of 2013, the most significant change in U.S. Patent Laws became effective with the enactment of the “first-inventor-to-file” provisions, which now awards the patent to the first inventor to file their patent application in the Patent Office.


When evaluating businesses’ existing IP strategies, look at time-to-market development and align this with the product patent filings. Knowing that, in highly competitive markets, each competitor may recognize the same market needs and are working on products that solve those needs; filing early and often should become a top priority. Although the first to market may not always win the day, the first inventor to the Patent Office will.


4. Review Employment/Supplier Contracts – Company Assignees Are Now Patent Applicants


Prior to the “America Invents Act” only the individual inventors could apply for patent protection of their ideas. Today, businesses can apply for and obtain patent protection for their products and direct prosecution of these applications to control the scope of patent coverage. Companies that have obtained assignments from their inventors, or who have obtained obligations to assign, can now submit and prosecute patent applications with the Patent Office. This provides businesses with greater flexibility in controlling the scope of patent coverage and allows a more streamlined process of applying for patent protection.


In addition, oftentimes companies work closely with suppliers in developing and manufacturing products being brought to market. Ensuring that protectable ideas coming out of those interactions are transferred back to the company should become a high priority. Reviewing employment/supplier contracts to ensure these obligations exist will provide the additional flexibility to shape an IP portfolio.


5. Know What Has Been Happening – New Prior Use Defenses Available to Combat Patent Infringement


Another significant change to the U.S. Patent Laws is the expanded role of “prior use” as a defense against patent infringement. As competitors attempt to restrict the sale of products with the threat of patent infringement, companies may now prove prior use of these patented methods and/or products to avoid infringement. Companies engaged in highly competitive markets with active IP competitors should review and document their past and present product developments to be prepared to fend off future claims.


Ultimately, a successful IP strategy should always focus on creating leverage in the marketplace with protected IP assets, and extracting value from those assets to generate revenue for the business. Creating leverage with protected ideas enables a business to create barriers to entry, create market space and turn competitors into strategic partners. To take advantage of these new patent laws, you should understand the business model and re-evaluate IP strategy. Good Luck.