Startup IP Strategy

Patent Timing — the Critical Rule

• File a patent application BEFORE any public disclosure
• US law provides a 1-year grace period for inventor's own public disclosure (35 U.S.C. § 102(b)(1)), but this grace period does NOT exist in Europe
• Japan
• China
• South Korea
• Canada
• Australia
• Or most other countries
• A product launch
• Conference presentation
• Blog post
• Academic paper
• Press release
• Demo day
• Or investor pitch to non-NDA-bound parties can trigger a public disclosure that destroys international patentability

Provisional Patent Application Strategy

• A provisional patent application (PPA) costs $320 (USPTO micro entity fee; under 4 employees) to file yourself, or $1,500–$3,000 with a patent attorney
• It establishes a priority date
• Is not examined
• Automatically expires after 12 months
• Converts to a full utility application (non-provisional) within the 12-month window
• Advantage: buy 12 months to raise money
• Develop the product
• Decide on international filing strategy
• Before committing to the higher cost of a full utility application

Budget Allocation Framework

• Priority 1 (Year 0): provisional patent application on core technical innovation
• Priority 2 (Year 0–6 months): trademark filing for company name + product name (USPTO TEAS Plus ~$350/class)
• Priority 3 (Year 0–12 months): trade secret documentation (NDAs; IT policies; departure protocols) — low direct cost
• Priority 4 (Year 12 months): convert provisional to full utility application + decide on PCT international filing
• Priority 5 (Year 1–3): continuation applications as product evolves

What not to Patent

• Obvious implementations
• Pure business methods without technical differentiation
• Features that competitors could engineer around in a week

What to Patent

• Novel algorithms
• Novel hardware designs
• Novel material compositions
• Novel manufacturing processes
• Novel software architectures that produce concrete technical improvements.

Patent Landscape

• Investors run patent searches (Google Patents; Espacenet; Derwent Innovation) to understand: what patents does the startup own?
• What patents could competitors use to block or slow the startup (FTO analysis)?
• Are there dominant players with foundational patents the startup relies on?
• Is the startup building in a crowded vs. open patent landscape?

Freedom to Operate (FTO)

• Investors want to know that the startup can operate without infringing third-party patents
• A negative FTO opinion (the startup's product likely infringes patent X) is a significant red flag
• FTO analysis typically costs $10,000–$30,000 from a patent attorney
• Investors may request this be done before term sheet for hardware/deep tech companies

Ownership Chain — Critical

• Who invented the technology, and does the company actually own it?
• Every inventor must have signed an IP assignment agreement BEFORE creating the invention
• If a founder developed technology while employed elsewhere, there may be an ownership dispute
• If a consultant or contractor developed key technology without a written IP assignment, the contractor may own it
• Common gap: co-founders who left early and signed no IP assignment

Government Funding

• Did the founders receive any government grants (NSF SBIR; NIH; DOE; ARPA-E)?
• Bayh-Dole Act gives the government a royalty-free license to inventions made with federal funding
• Government retains march-in rights
• Investors must know if government IP rights exist

Open Source License Audit

• Does the product incorporate open source code?
• GPL (copyleft) license: if your commercial product contains GPL code, the entire product may need to be released as open source
• Investors check for viral open source licenses contaminating the commercial product
• MIT/BSD/Apache licenses are generally acceptable

Employee IP Assignment Completeness

• Are all employees who contributed to the technology covered by IP assignment agreements?
• Startup founders must also have proper IP assignment to the company entity (not just to themselves personally)

Preparing for Diligence

• Create an IP summary document listing: all filed patents (provisional + utility + international)
• All trade secrets (categories without disclosing specifics)
• All key trademarks
• All open source components with licenses
• All employee/contractor IP assignments
• Confirm all assignments are recorded at USPTO.

What Trademarks Protect

• Brand identifiers including company name
• Product names
• Logos
• Slogans
• Brand colors (in some cases)

What Trademarks do not Protect

• Functional product features (trade dress of a functional shape is not protectable)
• Domain names alone (a domain is not a trademark without use in commerce)

When to File

• File trademark applications as early as possible
• BEFORE investing heavily in brand marketing (why build brand equity in a mark you might lose?)
• BEFORE your product launch (application date establishes priority)

US Trademark Basics

• USPTO TEAS Plus: $350/class (online)
• TEAS Standard: $450/class
• US trademark rights are use-based (you must use the mark in commerce)
• Application: intent-to-use (ITU) application allows filing before actual use
• ITU becomes registration once use is shown (Statement of Use filed)

Trademark Search

• Conduct a trademark search before filing (USPTO TESS + common law search)
• Conflicting marks can prevent registration and expose you to infringement liability

International

• Madrid Protocol allows filing in multiple countries from one application (approximately $90 + $30-40/class/country via USPTO)
• File in countries where you will do business and manufacture

What Copyright Does not Protect

• Ideas (only the expression)
• Facts
• Functional elements
• APIs alone (Oracle v. Google narrowed but did not eliminate API copyright in some contexts)

Registration Strategy

• Copyright registration is NOT required for protection (automatic at creation) but: required before suing for infringement in US
• Registration within 3 months of publication OR before infringement: statutory damages ($750–$30,000/work; up to $150,000 for willful) + attorney fees available
• Registration after infringement: only actual damages + profits (much harder to calculate)

Cost

• $35–$55 online
• Very low barrier
• Register software code
• Major creative assets
• Website

Practical Takeaway

• Trademark + copyright registration is cheap ($500 total typical) and provides substantial rights
• Patent is expensive ($15,000+) but protects functional innovations competitors can copy
• Trade secret is free but requires ongoing active management.

Broad Independent Claims

• Draft the broadest defensible independent claims at the time of first filing
• Broad claims cover the general concept
• Dependent claims add specific implementations
• A competitor who implements the general concept infringes the broad claim
• A competitor who avoids the broad claim but uses your specific implementation infringes the dependent claim

Continuation Chain Strategy

• File the initial application
• Watch what competitors actually build
• File continuation applications with claims drafted to specifically cover competitor products while relying on the original specification
• Continuation claims can be filed up to 20 years from the priority date
• This allows your claim portfolio to evolve as the market evolves

Design Patents

• Protect the ornamental appearance of products
• Apple v. Samsung ($539M design patent damages) showed design patents can be extraordinarily valuable for hardware
• Design patents issue quickly (~14 months) and relatively cheaply (~$1,500–$3,000 attorney + USPTO fees)

Trade Secret Strategy for Algorithms and Data

• Most ML models
• Recommendation systems
• Pricing algorithms
• And training datasets cannot be patented but can be protected as trade secrets
• Key: implement contractual protection (NDAs; restricted data access) + technical protection (access logging; DLP monitoring)
• Google search algorithm has been a trade secret for 25+ years despite thousands of engineers knowing its general structure

Limitations of Patents Against Large Companies

• Large companies have massive counter-patent portfolios (defensive patent pools)
• They will cross-license if you sue
• Large companies can: redesign around your claims
• Fund litigation costing you $5-10M per case
• Acquire your competitor

Most Effective Use of Startup Patents

• Injunction (small companies can get preliminary injunctions that genuinely shut down a competitor's product launch when the case is strong; harder for large company to simply ignore)
• Licensing revenue from smaller companies in the space
• Acquisition premium (a startup with strong patents commands 3-5x higher acquisition valuation)
• Investor signal (patents make investors confident technology is defensible)

Strategic Timing

• File before Series A
• File before product launch
• File before academic publications
• Use PCT to delay international costs while preserving priority.