A Fork in the Road: Production or Protection?

Start-ups, small businesses, and individual inventors—typically faced with budgetary concerns—often encounter the dilemma of where to allocate their limited funds. Frequently, entrepreneurs, especially when launching a startup business, need to decide whether to invest in their intellectual property (IP) rights, such as patents and trademarks, or rather in the development of their product or service. This predicament introduces risks that should be carefully considered. The investment in IP may delay the development and the launch of the product and the company itself, but the IP investment is in most cases a must. On the other hand, it is understandable that it is tempting for a startup company to invest in its own launch and growth to quicken its establishment and market presence rather than spend on IP. Serious risks are associated with each option, thus, the decision where to allocate that limited budget have to be carefully considered.

For instance, on an episode of Shark Tank show, we see the outcome of an inventor and entrepreneur decision. She invented a new product (a washable/reusable diaper) that turned out to be a market success. She presented a creative, engaging, and effective pitch to the Sharks. Very interested, the Sharks began to question her business strategies and the status of her success. Unfortunately, in the end the Sharks had to restrain themselves from investing when she revealed her weak IP protection. Although she did decide to invest in both IP protection and production, her IP protection hadn’t been well-balanced, apparently due to the same classical cause, the limited budget at startup. While she did have a patent, it apparently did not provide sufficient patent protection against her competition, likely due to narrow scope of the patent claims. As a result, her weak patent protection was no match for her competition, and her many competitors claimed significant profit that could have been hers had she been able to deter them in the first place. After years of being on the market with her innovative product, the market grew to about 70 million dollars in sales, but she had only a market share of about 3.5 million, due to the fierce competition with many sellers (including a former distributor) who apparently stole her idea and entered the market. Not only that she had a very small share of the market (5%), but the profit margins were low too, due to the difficult competitive climate.

This is a lesson to be learned by all entrepreneurs: A single facet of protection or a single IP tool may not suffice. When an IP attorney suggests for example a continuation application for patent to pursue a second patent with broader patent claims, that have to be carefully evaluated. A family of two or more patents is more likely to better protect the new product or technology. Similarly, securing other IP assets such as by filing trademark application(s), or employing other protective strategies (e.g., trade secrets), must be considered. The goal is to increase the business’ scope of IP protection, dissuading the competition from impeding on its success. Having multiple standpoints of IP protection could provide a more holistic armor for the business.

Of course, the converse situation rings just as true—budget cannot always support both business execution and proper IP protection, and sometimes the product will fail, so the funds spent on IP will be a loss too. However, decisions like these must be made very carefully. The entrepreneur should at all times be mindful of the advantages and disadvantages of investing in IP, and the risks involved on each side.

BLOG

  • Marin11/18/2015 6:11:11 PM

    PTAB Decisions Give Examples of Patent Eligible Subject Matter

    More
  • Marin11/18/2015 6:15:40 PM

    Covered Business Method Claims Are Not Required to Particularly Target Financial Industry

    More
  • Marin11/18/2015 7:31:35 PM

    When Is a Thesis Prior Art?

    More
  • Marin11/19/2015 2:13:05 PM

    An Innovator’s Dilemma: Design or Utility Patent?

    More
  • Marin1/28/2016 9:10:56 PM

    How Unpredictability Can Affect Obviousness Challenges

    More
  • Marin1/28/2016 9:15:16 PM

    The Patent Trial and Appeal Board Designates Two Decisions as Precedential

    More
  • M. Cionca and I. Kim2/4/2016 5:55:16 PM

    Software Inventions Are Still Patentable!

    More
  • Marin Cionca2/16/2016 6:34:53 PM

    In IPRs, patentees have to show that substitute patent claims are patentable

    More
  • I. Kim PhD2/26/2016 8:47:51 PM

    The U.S. Supreme Court Will Review Claim Construction Standards and Institution Decision Reviewability.

    More
  • Iris Kim, PhD3/25/2016 8:34:14 PM

    Challenging a Claim’s Validity with Different Standards of Claim Construction

    More
  • Marin Cionca5/17/2016 8:57:23 PM

    Patent Claims Rejection Based on Inherency

    More
  • Iris Kim, PhD6/1/2016 7:04:50 PM

    The Patent Trial and Appeal Board Designates Five More Decisions as Precedential

    More
  • Marin Cionca9/6/2016 9:26:12 PM

    Patent Case Law: New Example of Software as Patentable Subject Matter

    More
  • Marin Cionca9/15/2016 9:47:39 PM

    Patent Law Alert: Federal Circuit Opens Door for More Software Patents

    More
  • Marin Cionca2/21/2017 12:30:52 AM

    Software Patent Law Update: Federal Circuit Finds Graphical User Interface Patentable

    More
  • Marin Cionca4/25/2017 9:48:49 PM

    Monetization of Patents: How to Make Money with Patents

    More
  • CIONCA - Staff6/15/2017 5:32:14 PM

    Patent Law: Challenging the Patent Claim Definiteness Requirement

    More
  • CIONCA - Staff6/28/2017 8:26:07 PM

    Patent Law: Conditions Precedent May Expose Method Claim to Broad Interpretation During Prosecution

    More
  • CIONCA - Staff8/9/2017 5:39:58 PM

    Patent Case Study: The Novelty Of An “Invention” Is NOT Enough To Make It Patentable

    More
  • CIONCA Staff8/20/2017 3:16:11 PM

    CIONCA on Patents: Think Twice Before Suing for Patent Infringement and Fight Back when Unreasonably Sued

    More
  • staff9/15/2017 9:33:30 PM

    cionca

    More
  • staff9/27/2017 5:00:12 PM

    Claim Indefiniteness During Patent Pre-Issuance: Define Your Invention, Not Just Your Audience

    More
  • staff9/27/2017 5:12:07 PM

    CIONCA - Patent and Trademark Law Attorney

    More
  • Staff9/28/2017 7:27:22 PM

    CIONCA

    More
  • Staff11/3/2017 4:20:04 PM

    An Introduction to Provisional Patent Applications

    More
  • 11/10/2017 6:47:44 PM

    An Introduction to Design Patent Applications

    More
  • 11/17/2017 1:24:20 PM

    An Introduction to Patent Searches

    More
  • 12/1/2017 8:01:27 PM

    An Introduction to Patent Cooperation Treaty Applications

    More
  • 12/26/2017 6:04:25 PM

    CIONCA Sets Foot in San Francisco

    More
  • 1/2/2018 7:47:09 PM

    The Lanham Act: Disparagement Provision Violates the First Amendment

    More
  • CIONCA Team1/17/2018 8:12:06 PM

    A Fork in the Road: Production or Protection?

    More
  • CIONCA Team2/16/2018 4:07:48 PM

    Fashion and Intellectual Property

    More
  • 3/8/2018 1:25:46 PM

    Proceed with Caution: Consider Carefully when Narrowing Claims for Allowance

    More
  • 3/20/2018 12:50:05 PM

    Andrei Iancu - New Director of the USPTO

    More
  • CIONCA Staff4/13/2018 9:10:04 PM

    It Take Two to Tango: Knowles v. Iancu, a Standing Dispute in a PTAB Decision

    More
  • CIONCA Staff4/20/2018 5:25:25 PM

    USPTO Changes Examination Procedure Pertaining to Subject Matter Eligibility in View of Berkheimer v. HP, Inc.

    More
  • 5/4/2018 7:37:51 PM

    The Hague System for Protection of International Designs

    More
  • CIONCA IP5/17/2018 9:54:58 PM

    Marin Cionca Presents at OCIPLA May 2018 Luncheon

    More

Marin Cionca, Esq.

Registered Patent Attorney

USPTO Reg. No. 63899

VERIFY

CONTACT INFO

About our IP law firm: We are an Orange County, CA based boutique intellectual property firm with a focus on patent and trademark application, prosecution and opinion services, offering its IP services primarily at flat fee rates. We serve local OC clients, as well as clients throughout US and international clients.

HOME               

Let’s talk!

We’d love to hear from you…we just need a little info
about your plans to take over the world!

P.S…Feel free to call us! (800)985-9198