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A Better Partnership


Nov 2009
November 01, 2009

Top Twelve Things an Investor Needs to Know About Intellectual Property

1.    Inventors Often Do Not Understand Intellectual Property.

  • You may want to take an active role in managing intellectual property issues
  • Strong protection can be important to the success of a business venture
  • It is easy to make a mistake that will irrevocably damage your intellectual property position and likelihood of success
  • If you are not prepared to provide oversight and guidance, you are taking a substantially greater risk

2.    Patents Are No Assurance Of Success.

  • Be careful not give too much credit to the existence of a patent
  • It is true that a strong patent may make it very difficult for a competitor to get a foothold
  • A weak patent, however, may provide protection for only an insignificant feature that does nothing to protect against competition
  • You can have the strength of a patent reviewed prior to investing

3.    Even a Strong Patent Is No Assurance Of Success.

  • Remember that a strong patent is not a guarantee of success
  • Typically, a good business plan is required for success
  • You cannot rely on a technology to sell itself or to automatically run a good business
  • Most patents can be designed around in time

4.    A Patent Provides No Protection Against An Infringement Claim.

  • A patent does NOT represent a Patent Office determination that there is no infringement
  • A patent infringement claim can destroy a business plan
  • A patent gives the right to prevent others from using a patented invention, but provides no defense against an infringement claim
  • The risks are typically greater when the technology is an improvement in an existing field
  • You can attempt to identify infringement risks before investing

5.    Patents Have A Geographical Scope.

  • Patents must typically be obtained on a country-by-country basis
  • There are a few exceptions:
    • EPC (European States)
    • ARIPO (Former British Colonies)
    • OAPI (African Countries)
    • Eurasian (Former Soviet Block Countries)

6.    There Are Strict Deadlines For Pursuing Patent Protection.

  • You may want to confirm the possibility of pursuing patent protection before investing
  • Steps need to be taken early to reserve the right to pursue patent protection
  • Different standards apply depending on whether you wish to pursue foreign patent protection:
    • U.S. only: file within one year of the first publication, public use or offer for sale of the invention
    • Most foreign countries: file before the invention is publicly known in any way

7.    One Strategy for Approaching Foreign Filings.

  • You can reserve your right to make foreign filings by filing a U.S. patent application before the invention is publicly known in any way
  • This will give you 12 months to make foreign filing decisions
  • You can file a PCT application at the end of the 12-month window if you remain uncertain about foreign filings
  • The PCT provides a mechanism for delaying foreign filing decision for up to 30 months

8.    Reviewing Patent Applications.

  • You may want to review existing patent applications before investing
  • The potential patent protection available for an invention depends, in part, on the quality of the application
  • Poorly drafted applications can lead to overly restrictive claims and a narrow scope of protection
  • Mistakes in a patent application can result in an invalid patent

9.    Provisional Patent Applications Can Present Substantial Risk.

  • You should be wary of provisional patent applications
  • A provisional patent application is a priority document that can be used to provide an earlier filing date when you file a regular application
  • Provisional applications only provide protection for what is adequately disclosed in the filing
  • It is a common mistake to try to save money by filing a "quick and dirty" provisional application that does not adequately disclose the invention
  • More likely to present issues when you attempt to enforce a patent

10.    Good Decisions During Patent Prosecution Can Be Crucial.

  • You may want to play a role in patent prosecution
  • The scope of a patent is typically the result of negotiations with the Patent Office
  • These negotiations often center around the closest prior art (pre-existing technology)
  • Handling these negotiations properly can make an important difference in patent scope
  • Some of the benefits to you:
    • Help make wise decisions
    • Understand prior art and limits on what can be protected
    • Understand what your competitors are doing or have done

11.     Different Forms of Intellectual Property.

  • You should consider different forms of Intellectual Property
  • Different products and services are better protected by different forms of intellectual property
    • Patents
      • Utility patents
      • Design patents
    • Trademarks
    • Trade Dress
    • Trade Secrets
    • Copyright

12. The Role of Agreements.

  • You may want to ensure that all interactions between parties are governed by agreements
  • In the absence of appropriate agreements, you risk:
    • Misaligned expectations (damage to relationships)
    • Loss of intellectual property rights
    • Loss of the right to pursue protection
    • Loss of ownership
    • Creation of implied licenses


  • Intellectual property can play an important role in achieving business success
  • Intellectual property requires early attention in the business plan
  • Understand intellectual property so you can evaluate the potential of a business opportunity and drive maximum value

For more information, please contact your WN&J attorney or Bill Dani at 616.752.2197.

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