23 Feb Protect your intellectual property before it's too late
Be it product or process, having the next big thing is not enough.
Whether you’re an 800-pound gorilla in the marketplace, a mid-sized firm occupying several hard-won niches, or a high-energy start-up, protecting your innovations is critical to your success, says Tom Miller, an intellectual property lawyer with Michael Best & Friedrich in Milwaukee.
In a recent presentation to eInnovate, a Milwaukee-based technology forum, Miller said some researchers have estimated that 80 percent of market capitalization in publicly-traded companies is tied to intangible assets, most of which are intellectual property.
The power of invention, and protecting the rights to that invention or process, was illustrated recently when Milwaukee Electric Tool Co. (METCO) introduced the V28 lithium-ion battery. The introduction marked a significant advance for cordless power tools, because it opens the door for development of high-current products that formerly required an electric power cord. As a result, METCO will introduce the world’s first cordless band saw, as well as a cordless hammer-drill, a circular saw, reciprocating saw and impact wrench.
The announcement caught METCO’s larger competitors off guard and caused industry analysts at Credit Suisse First Boston to downgrade its rating of Black & Decker on January 25, after which Black & Decker’s stock declined by 5 percent immediately.
“We have identified 12 inventions surrounding this technology,” said Ed Lawson, an intellectual property specialist from Michael Best who has been closely involved with METCO in securing patents for the battery. “We are not only protecting what we are doing, but looking at ways our competitors may get around this, and to stop those avenues as well.”
Miller gave the following reasons for protecting your innovations:
- You protect an investment in developing technology by preventing competitors from copying that technology. These are typically the assets that add the most value to your business.
- You boost your research and development in branding your effectiveness. You get more bang for your buck in the money you have invested.
- If you are involved in the process of protecting your own technology, you have a pretty good idea of what everyone else is doing as well, so you are able to anticipate market and technology changes.
- Protecting your innovation enhances the financial performance and valuation of your company. License revenue is one obvious way to generate better financial performance. You can also package unused intellectual property to create startups or spinoffs.
Software innovations need to be protected
Software developers tend to believe that the things they create are not innovative, Miller said. Absent specific legal protection, innovations may be freely copied by anyone, he said.
Copyright protection was thought to be the best tool to protect software inventions, but over the last few years, the courts have limited the ability of copyrights to provide meaningful protection, Miller said. Patents have been used by companies with great success in recent years to protect their software-related inventions.
Textura LLC, a business software firm based in Lake Bluff, Illinois, is seeking patents for a technology that re-engineers the business process for efficient construction payment.
Textura has developed a process that streamlines the cumbersome collection and payment of information and invoices via the Internet. With cashflow a key consideration in the construction industry, Textura says its product offers a more secure and accurate process, and subcontractops tend to get paid faster.
Textura’s intellectual property involves elements of the software, as well the business process that it has re-engineered. Textura has a copyright on the software, and has filed for a number of patents through Michael Best & Friedrich.
After Textura CEO Pat Allin and his team explained what his company was doing, Miller recommended doing a patent search that would determine if anyone had a technology or process similar to what Textura was doing in the construction industry. The patent search determined that Textura was blazing a new trail. Allin and his firm worked with Miller to file preliminary patents last June, and then filed a full-blown utility patent in January. Though his own research, Allen discovered that there were no similar patents around the world, so Textura filed global patents in January.
“It will take about two years to get the patents, but our protection starts from the time we filed,” Allin said. “I would not underestimate the process of doing the patent search. It has been a very important piece of business intelligence in crafting our strategy. We have determined that no one else is doing this. Our competitive advantage comes in moving quickly and being first and having valid patents.”
Depending on the scope, a typical patent search will cost anywhere from $8,000 to $15,000 to perform, Miller said.