Small business: Protect your invention

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Jason Rudkin-Binks, HGM Legal partner. Photo / Brett Phibbs.
Jason Rudkin-Binks, HGM Legal partner. Photo / Brett Phibbs.

Jason Rudkin-Binks, Partner, Hudson Gavin Martin, a law firm which helps entrepreneurs with intellectual property concerns.

Protection of an invention

The core of an invention may be protected in primarily one of two ways; registration of a patent or through confidentiality. These two methods are the antithesis of each other. The patent process involves disclosing the invention to the world (via the local intellectual property office) in return for a statute-backed monopoly in the invention. Conversely confidentiality means not disclosing it at all, or only under carefully crafted agreements, and relying on the hope that no-one else will stumble upon the same invention.

There are pros and cons with each approach, for instance a patent only lasts for a set period of time whereas confidentiality can last forever. Patents also guard against a third party having the same idea at some time later, whereas confidentiality does not offer any protection against a third party having the same idea.

Ultimately the nature of the invention may dictate which route is best (for instance a patent may simply not be available as certain criteria have to be met in order to qualify).

Pitfalls

Two pitfalls that need to be avoided by inventors are the assumption that, simply because something is new to the inventor, that it is truly new (i.e. on a global scale) and therefore patentable and the strong urge to tell everyone about their new idea.

Falling into either of these traps can lead to the inventor failing to capitalise on the invention, either by becoming bogged down in the pursuit of registrable IP ,( a patent) or unwittingly inviting competitors to copy the idea.

The unfortunate truth is that there are few truly original inventions and therefore very few strong patents flowing from such inventions and the single most important route to success is the identification of a niche and being the first to occupy it.

Any new inventor will not know everything about his area of expertise. The assumption is often that, as invention is new to him, it is truly new. This is often compounded when the inventor asks his friends and relatives what they think, chances are that it is also new to them too. However the stark reality is that this means that perhaps only 10 people in the world consider it to be new, and of course the world is a big place.

This has lead to the often quoted notion that, given sufficient research, a great number of patents should not have been granted. The dogged determination to pursue a patent at all costs can therefore ultimately be a waste of time.

Conversely by keeping an idea confidential for as long as possible, the inventor can concentrate time and money on the route to market and maintain a head start over competitors.

Due diligence

The first step is, prior to speaking to anyone about the invention, to research it to death, the internet is an ideal tool for this, for instance there are many free online patent databases that can be searched. The chances are that something similar will be revealed. The next step is to ascertain why the previous version was not commercially viable; there may be a myriad of lessons to be learnt from others mistakes.

Armed with the knowledge of just quite how "new" the invention is and perhaps a good insight into why previous attempts failed, the inventor can then proceed to map out his/her own commercialization plan. Now of course the "invention" is no longer solely the invention per se but rather a sound business proposition.

Commercialisation

The next step is to return to our initial starting point of how to protect the invention, either through a patent or confidentiality. Crucially the right to a patent is destroyed by any non-confidential disclosure of an invention. Therefore whenever the inventor talks about the core of an invention, it must be done in confidence. This may be under the auspices of a confidential discussion, but by far the best approach is under a confidentiality agreement which serves as a permanent record of the time and nature of the disclosure. So long as the invention is kept confidential, a patent may be sought at any time.

At a practical level, any disclosures at this stage are best undertaken in a targeted sense after careful consideration as to the reason for the disclosure and ensuring that it has a potential benefit to the inventor. "Need to know" is a key phrase here, both in terms of the level of disclosure and the identity of the recipient. The ultimate protection being that if something is not disclosed, it cannot be copied.

Online disclosure

In terms of disclosure the online environment is no different to any other forum (a trade show for instance), the key principles are the same. Only disclose what is necessary and, where possible, do so in confidence.

There is of course a practical issue as to how the extent of disclosure can be controlled in such an environment. A simple solution is that by only disclosing discrete portions of inventions, practical safeguards can be put in place. For instance, it is unlikely to be necessary to fully disclose how a gadget achieves a result, only that it achieves the result. The kernel of the invention being the internal route to the result, rather than the result itself. In this regard, online is no doubt a useful way of showcasing a fully-fledged product, but not the best place to float early stage ideas.

Ultimately to find an investor or licensee, an inventor may need to disclose most, if not all, of the inner magic of the invention. However such disclosure need not be a one step delivery of information. Instead the process can be staged so that if at any point either side decides to call a halt, the extent of future exposure is ring fenced.

Key to success

There are many instances where the wheel has been re-invented and the "re-inventor" has gone onto global domination and accompanying fame and fortune. Such inventions were not of course new in an IP context (in fact there may have been very little true IP involved at all), but an aspect of how the invention was commercialized was new and lead to the illusive success that previous inventors failed to find.

The key factors in succeeding in launching a new invention are therefore to completely understand the nature of the invention and the surrounding inventive and commercial landscape, not to become obsessed about finding protectable IP within the invention, concentrating on getting to market and creating some strong protectable IP around the invention, i.e. a brand.

Frustratingly, any half decent invention will be copied but with a strong brand and six month's head start, such imitations may struggle to make any inroads into the strong and loyal demand for the "original" item created by the first to market.

Trade Me is a great example of a local initiative. This was similar to other online trading sites at the time but because the inventor understood the local psyche and was first to market in NZ, he was able to get such a strong foothold that it has since commanded a large market share.

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