When starting a company there’s a long checklist of important things to consider straight away such as recruitment, raising cash and marketing. One thing that is often overlooked during those frenetic early days of launching a startup is legal protection for that ‘billion-dollar idea’.
Getting it wrong can be costly – Mark Zuckerberg paid $65m to settle the claim brought by Tyler and Cameron Winklevoss that the Facebook boss stole their idea for a social network.
So what should founders know about legal protection for their ideas when starting a new venture?
UKTN spoke to Fiona Law, a patent attorney at Potter Clarkson, to find out.
When it comes to patents, Law says it is never too early to start thinking about protecting your idea. In fact, it’s better to move early than leave it until it’s too late.
“A patent is a monopoly, a 20-year monopoly to stop somebody else, ripping off your idea,” says Law.
While some startups may not initially have the capital available to submit a patent application, Law says it is worth factoring into your business plan from the offset.
Doing this tells any potential investors that you are thinking about how to protect their investments and make money in the long term.
What can be patented?
Both 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 provides an improvement
When it comes to patents there are different variations. There are patents that protect how something works, a trademark that safeguards a company’s branding, design patents that protect how something looks and trade secrets that keep information private.
Whilst trade secrets have no time limit, Law points out that for most tech fields things can be “reverse engineered”.
According to Law, if you have an idea with technical innovation, of value that hasn’t been done before you have the right to have a patent granted on that.
Putting an exact cost on how much a startup will need to spend on a patent is not an exact science. A startup could spend upwards of £10,000 in the first year alone on an initial patent application. But protecting intellectual property (IP) can be argued as an investment.
“IP goes on your balance sheet, people shouldn’t think of IP as a cost, they should think of it as a valuable asset,” explains Law.
If you cannot afford a patent you can do what is known as an IP strategy, which is an outline of a plan on how you will approach patent application once you do have the funds.
When applying for a patent, startups need to have a clear idea of the concept. Is there a need for it? Has it been done before? How does it differ and what benefits would it give to society?
“If you’re trying to raise a million pound’s worth of investment, you’re going to look really stupid if you haven’t invested in protecting your invention,” says Law.
Once you are clear on your vision you inform your patent attorney, who will then write a patent application that normally takes a few weeks.
Patent applications can then take between one to two years to be granted.
For those worried about cost, the UK Intellectual Property Office has a range of grant schemes for startups.
There is one grant that will conduct an audit of your IP and you only pay a percentage of the actual costs.
There are also tax credits for research and development. Another tool that startups can use is the Patent box, which lets companies reduce their corporation tax burden if they have a patent.
The UK patent office currently accelerates any patents that could benefit the environment.