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Call a Patent Attorney Before Pitching Your Idea to Investors

Patent AttorneyAs 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.

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Ideas From a Patent Attorney for Keeping Your Invention Safe

Patent AttorneyAs a patent attorney, we speak with clients who have great ideas, but are afraid to take them into the world for fear that they might be stolen. This, unfortunately, is a very real dilemma. For the inventor or creator of a product or idea, they often need to be able to sell the idea to another company or to investors so that they can enter the production phase. Many entrepreneurs and inventors hesitate because they are afraid that they could reveal too much of their idea and have it stolen or duplicated. Fortunately, there are ways to protect yourself from such fears becoming a reality.

Even with a good attorney, getting a patent takes time and money. If you need to pitch your idea to a buyer or an investor today, in order to get the orders or capital you need to be successful, this can create an immediate challenge. There are, however, two methods of protecting yourself from either of these eventualities and giving yourself the breathing room you need to grow.

The first option is to file a provisional patent application. Typically you will need to meet certain criteria, the most important of which is that your invention has to be patentable. As a patent attorney, we can tell you whether or not your invention can be patented or submitted for a provisional patent. Additionally, within one year of filing for a provisional patent, you must also file a regular patent application.

Filing a provisional patent application has three distinct advantages:

  1.  It is easy to prepare
  2. There is very little cost associated with it
  3. It gives you the right to use “patent pending” which can deter knockoffs.

The second options, and if done right the more viable option, is to have the parties sign a non-disclosure document. A non-disclosure agreement, sometimes called a confidentiality agreement, is a legal document that prevents the signer from using your secrets without permission. There are a variety of different forms of a non-disclosure agreement (NDA) can take, but all of them contain these three elements: –

  1. The definition of what is and what isn’t confidential: Every NDA provides a clear definition of what elements are considered secret information or trade secrets. They also specifically outline those elements that are not considered proprietary and relieve the signer of any obligation to protect information that is either not proprietary or can be found from a source other than the inventor.
  2. Obligations of the signer: The basic premise of an NDA is that the signer, or receiver of the information, must hold the information in confidence and agrees to never share it without the express approval of the inventor. Other provisions like agreeing to never induce someone to share this information, agreeing to never breach the agreement, and agreeing never to attempt to acquire information by improper means are relatively standard language for any non-disclosure agreement.
  3. Time: Agreements are almost always bound by time limitations, and NDA’s are no exception. Typically an NDA will be for five years unless otherwise negotiated by the parties. The rule of thumb is that within five years it is likely that the invention and its secrets will probably be available to others outside the room.

For more information on how to keep your invention safe, speak with a patent attorney.