When starting a business, there is a long checklist of important things to consider right away, such as recruiting, fundraising, and marketing. One thing that often gets overlooked during those hectic first days of launching a startup is the legal protection of that “billion dollar idea.”
Getting it wrong can be expensive – Mark Zuckerberg has paid $65m to settle the lawsuit filed by Tyler and Cameron Winklevoss that the Facebook boss stole their social media idea.
So what should founders know about the legal protection of their ideas when starting a new business?
UKTN spoke to Fiona Law, patent attorney at Potter Clarkson, to find out.
When it comes to patents, Law says it’s never too early to start thinking about protecting your idea. In fact, it’s better to move early than to leave it until it’s too late.
“A patent is a monopoly, a 20-year monopoly to prevent someone else from snatching your idea away from you,” Law says.
Although some startups may not initially have the capital available to submit a patent application, Law says it’s worth factoring into your business plan from the start.
This tells all potential investors that you are thinking about how to protect their investments and make money in the long run.
What can you patent?
Physical and abstract ideas can be protected. A common misconception, according to Law, is that software cannot be patented. But in reality it can be as long as it does something technical and brings improvement
As far as patents are concerned, there are different variants. There are patents that protect how something works, a trademark that protects a company’s brand image, design patents that protect how something looks, and trade secrets that keep information private.
While trade secrets don’t have a time limit, Law points out that for most areas of technology, things can be “reverse-engineered.”
According to the law, if you have an idea with a technical, valuable innovation that has not been done before, you have the right to have a patent issued on it.
Putting an exact cost on how much a startup will have to spend on a patent is not an exact science. A startup could spend over £10,000 in the first year alone on a first patent application. But intellectual property (IP) protection can be seen as an investment.
“IP is on your balance sheet, people shouldn’t think of IP as a cost, they should think of it as a valuable asset,” Law says.
If you can’t afford a patent, you can do what’s called an IP strategy, which is an outline of a plan for how you’ll approach the patent application once you will have the funds.
When applying for a patent, startups must have a clear idea of the concept. Is it needed? Has this already been done? How is it different and what benefits would it bring to society?
“If you’re trying to raise a million pounds of investment, you’re going to look really stupid if you haven’t invested in protecting your invention,” Law says.
Once you are clear on your vision, you inform your patent attorney, who will then draft a patent application which normally takes a few weeks.
Patent applications can then take between one and two years to be granted.
For those worried about costs, the UK Intellectual Property Office offers a range of grant schemes for startups.
There is a grant that will audit your intellectual property and you only pay a percentage of the actual costs.
There are also research and development tax credits. Another tool that startups can use is the Patent box, which allows companies to reduce their corporate tax burden if they hold a patent.
The UK Patent Office is currently accelerating all patents that could benefit the environment.