As a patent attorney, we work with a lot of designers, engineers, and entrepreneurs with excellent ideas. Many of our clients ask us if they need to file for a patent prior to seeking the investment capital necessary for bringing their idea to market. The answer is largely circumstantial, however, as a lawyer, we always recommend filing a patent first in order to protect yourself.
The challenge that many entrepreneurs or inventors face is how to seek funding while remaining protected. Taking an invention from concept to initial production and then to market, can be extremely expensive. Seeking investor capital is often the only way to move the project forward. Here, however, are a few things to keep in mind when speaking with investors.
- Prove your concept. Most investors are looking for you to prove your concept and as a patent attorney, this can be dangerous. For example, if you manufacture your invention in a limited quantity to see if it sells, someone could steal and knock off your idea. If you don’t have a patent or patent pending, it will be difficult to prove that it truly was your idea.
- Intellectual property. Investors may also ask about your intellectual property (IP). From an investment point of view, having IP that is defendable is important. This goes back to the same concern as above. If you put your invention out there and it is indefensible, someone could use your ideas, flood the market, and there would be no way to seek compensation. Having a patent or patent pending, however, can protect you.
- Know your audience. When speaking with a group of investors it can be difficult, if not impossible, to know what other businesses or investments they are involved in. You may, for example, be speaking with someone that has heavily invested in your competition. While you would hope that they would disclose this information, don’t count on it. This is a particular risk when presenting to a large group or investor forum. If you don’t have a patent on your invention, you should be cautious with what information you divulge.
The best way to protect yourself from your ideas getting stolen is to file a patent before talking to anyone, and that includes investors. We understand that the process can be time-consuming and costly. However, it is worth it to ensure that you don’t lose out on the opportunity to benefit financially from what you have created. After all, the biggest challenge that you face is someone producing your invention and gaining market share without a way for you to prove that you invented it first and own the rights to it. Once someone has saturated the market, competing with them after the fact will require significant amounts of marketing capital. Additionally, you will have lost your first movers advantage. With that in mind, we encourage you to seek the assistance of a patent attorney to ensure that your rights and your future are protected.