Win the Race by Cutting in Line: IP Timing Strategies for Startups

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I can still hear the familiar shout – “No cutting!” – when I reminisce about the lunch line back at my grade school. It’s a rule ingrained in us since childhood that we generally follow in our business world.

As startups seek to differentiate themselves in the consumer products space, the question is not – “Should we get IP?” – but “How quickly can we get the right IP?” There’s no denying that the IP game is a race, and emerging growth startups need every advantage in running that race.

So instead of rattling off an IP laundry list, let’s focus on a more targeted approach and see how we can legally cut in line to acquire the right IP for startups.

Timing Strategies for Trademark Protection

Trademark law generally follows the “no cutting” rule in the sense that the first business to use a trademark in commerce (e.g., selling product under the mark) is the rightful owner of the mark. There is, however, one big exception: the Intent-To-Use (ITU) trademark application.

By filing an ITU application, you cut in line ahead of others who may actually use a similar trademark before your earliest usage. Consider this example:

Even though the competitor began using the mark before you, you would be regarded as the first user provided that your ITU application matures into a registration. No line-cutting benefits are afforded for ITU applications that fail to register. This makes the trademark search prior to filing the application all the more important in minimizing any obstacles to registration.

In addition to legal benefits, a practical benefit of an ITU application is that you can apply for a trademark before launching your product. This prevents others from beating you to the Trademark Office as soon as they see your brand or product name.

Timing Strategies for Patent Protection

The first-to-file rule has been one of the most significant changes in patent law enacted the under America Invents Act (AIA). Under this new rule, inventors can no longer rely upon an earlier invention date to prevail over a patent applicant who files first. It is now a race to the Patent Office regardless of who invented first.

While winning the patent race may seem simple enough (file your patent app first), executing this strategy is a bit more involved. Here are examples to show how a startup can use provisional and non-provisional patent applications to implement a cost-effective patent strategy:

In the scenario below, a provisional patent is filed on June 1, 2015 by a consumer product startup which we’ll name First-Filer.

First-Filer will have patent pending status for one year and a deadline of June 1, 2016 to file a non-provisional patent application. This patent-pending status, however, covers only the contents of the provisional which in our example consists of a concept with features A, B and C.

Suppose First-Filer launches its first product on July 1, 2015 with features A, B and C. So far, so good. Assuming those three features are adequately detailed in the provisional application, First-Filer need not worry as long as it files the non-provisional application by the 1-year deadline of June 1, 2016.

However, let’s suppose First-Filer subsequently launches a second version of the product (as is often the case with innovative companies) on Dec. 1, 2015 that includes a new feature D never disclosed in the provisional application. First-Filer will not be able to claim priority to the provisional for feature D. However, First-Filer has up to one year from Dec. 1, 2015, its earliest date of disclosure of feature D, to file a U.S. patent application covering that feature (i.e., Dec. 1, 2016 deadline to file for feature D). This 1-year grace period is available only in the U.S. and for inventors who disclose their own inventions. Most foreign countries bar any patent protection for concepts publicly disclosed before the priority date (aka “absolute novelty bar”).

In the above timeline where the non-provisional is filed on June 1, 2016 covering features A, B, C and D, First-Filer will have different priority dates (earliest patent filing date) for certain features:

If First-Filer were to seek international patent protection, only features A, B and C would be eligible because feature D was publicly disclosed before its priority date, thus violating the absolute novelty bar.

Note that the provisional serves as a valuable placeholder for those features contained therein. As long as the non-provisional is filed within one year, the non-provisional is back-dated to the provisional filing date for those features included in the provisional.

In the above example where First-Filer was unable to file another provisional prior to the 2nd Launch Date, a wiser approach would have been to file the non-provisional application immediately after the 2nd Launch Date to secure an earlier priority date for feature D, instead of waiting until the 1-year deadline of June 1, 2016.

Of course, an even better approach would have been to file a second provisional prior to the second launch as follows:

Now the priority dates look like this:

By filing the second provisional prior to the second launch, First-Filer will beat third parties attempting to patent feature D after witnessing the second launch. Another advantage of covering each feature with at least a provisional application prior to going public is that First-Filer is eligible for foreign patent protection on all features.

AIA geeks might also point out that you can simply disclose your invention publicly before someone else files a patent application in order to defeat their application. This approach is both impractical and inferior because: 1) the burden would fall on you to prove that you publicly disclosed the invention claimed in a third party application (i.e., this may cost you more money than if you had just patented your concept), and 2) if someone were inclined to steal your concept, they could modify the patent application so as to claim a slight variation of your original concept.

Now that you know what the professionals know, there’s no reason for delay in the IP race. Get your game on and start cutting in line.

ABOUT THE AUTHOR:

Vic Lin is a startup patent attorney, blogger and cofounder of Innovation Capital Law Group, a boutique corporate and IP law firm dedicated to helping startups. Vic is the author ofstreamliningIP.com featuring cool products and PatentTrademarkBlog.com featuring IP questions and answers.