Having intellectual property is good for valuation of your business. It is definitely an asset worth investing in especially if your goal is to become an acquirable brand. But first, you have to make sure that your trademarks, patents, and copyright are relevant to your long term business plan, or else they will be useless. We will talk about some examples of what we have done and how we operate as product inventors so you can have a sense of the value of protecting your intellectual property, and hopefully learn from our practical experience how you can save significant time and preserve capital in the process. If you feel that you need to disclose information to a licensing partner, a manufacturer, or a distributor, we have useful resources, as well as intellectual property attorneys we have recommended to our own clients whom you can get in touch with for invention protection.
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We’re going to talk about patents, trademarks, and copyrights. I want to start by first defining that intellectual property is good for evaluation in your business. Any good business planner would tell you that having intellectual property as an asset is good for your value and good for your business overall. Having relevant intellectual property and having good patents are as important and probably more so. We always look at that as “Is this relevant to our business? Is this making sense for a long-term plan before we spend money on patents and trademarks?” I’m going to talk a little bit about timing of those things, but first I want to define the different things because people are very confused.
A trademark is not a patent. A trademark doesn’t stop anyone from making your product. A trademark is simply a brand mark. Coca-Cola has the brand mark. Coca-Cola’s recipe is not even patented. It’s proprietary. Assuming that they did patent it at one time, that would have been a different asset. I need you to understand that when you make a logo, a mark, that’s trademarkable. There are lots of rules about trademark violations under the digital marketing rules. There’s a lot of tape down and other things, so that’s why trademark is so in your mind as an eCommerce seller, but it is not stopping anyone from making your product. It’s just stopping someone from putting the same mark you already have on that product. Patents instead, do that.
Design patents and utility patents are two different things. Design patents are the look of the product. Is my look original? Am I able to file a design patent for it? Do I have an original shape, an original stitch pattern if you’ve got a backpack or an office chair? Utility patents have to do with functional changes, things that are functionally different than anything else on the market or anything else in your category. Those things, advising you on whether or not design, patent, or utility patent, you do need an attorney involved. I’m going to say right out here, I am not an attorney, I’m not giving you advice on what you should do with your product. I’m trying to give you some information and some examples of what we’ve done and how we operate so you have a sense of the value of protecting it and ways by which you might do that and preserve capital at the same time. These are our goals.
The last thing of those types of things is copyrights. Copyrights are on text, on information, on all of those things. Copyrights are valuable when you’re doing books, information products and other things like that, but copyrights are not applied to useful products. You must file a patent on useful products.
We have to think about that in terms of its costs because copyrights are inexpensive, trademarks are relatively inexpensive, but design patents and utility patents are the most expensive. Above that, you are filing a US patent initially if you’re here in the US and then you may need to file international patents. Here’s where costs start to explode, the more countries you file in all over the world that you decide that you may want to sell to. You don’t want to file international patents for places you’re not going to sell or you’re not going to enforce it. It doesn’t matter for that. Making it in a country, you don’t need to file unless you’re going to sell into that country. It’s about marketing and selling and not where you make it. Even if you make it in Asia, you don’t necessarily have to file an Asian patent. It may make sense for you or it may not.
The most important thing that we do is we wait as long as possible before filing a patent. This goes counter to the attorneys out there who are cringing and whatever because we’re in a first to file market, so they changed the rules. The first to file has the rights. We want to wait as long as possible in the process to make sure we’re going to make it so that we don’t waste money on a patent that we’re not going to use. We also don’t want to waste money on a patent that isn’t going to be made or have the same features as we intend to market. That’s why we wait until after some of the early prototyping stages. To prototype and protect it overlap each other in terms of it because we may prototype and protect it right away. We may file the patents right away because we know exactly what we’re going to make. We’ve already dialed in through our prove it phase and we know where we’re going here. We don’t want to refile patents. We don’t want to go back and have to file extensions or crash a patent that we’ve already paid for all the search and all of the filing fees, but then not get it to issue because it’s not what we’re making at all. The cost implications of doing it too soon means refiles, extensions, and maybe filing international patents in countries that we have no intention of selling it or don’t want what we have to sell.
We need to think about this in terms of preserving our capital and preserving our budget. We want to make sure it’s the right product, we’re absolutely going to go to market with it, and we’re sure it’s the right thing. We aren’t filing a patent just to file a patent. Having a patent and an asset for your business needs to be useful to your business, not just having a patent number and saying, “That’s an asset to our company.” It’s not an asset if it doesn’t add to the bottom line of your company at the end of the day. We want to make sure your assets are in use, their patents are in use, so that’s why we wait as long as possible.
There’s also the protection side of things. This is where a lot of inventors and a lot of original product people get caught up in, how you keep others, especially the manufacturers, from stealing your idea. How do you keep other Amazon sellers from stealing your idea? First off, your patent needs to be filed before it ever goes up on Amazon, so no one should have ever seen it before. Very frequently, we file a patent just as we’re going to manufacturing process for final prototyping or other things. A lot of times if we have specialized features, we either split it up between different manufacturers so each one doesn’t know what the other ones are if there are multiple features. We do that and then we consolidate it in the US and make the final prototype and/or we use 3D printing and other processes to make sure that we’re not exposing the invention too soon. As soon as we’re ready and we have to get a manufacturer involved to make the tooling or to make the final samples, make the final prototypes, we file the patent right before that time happens, so we’ve extended it as long as possible.[Tweet “The best way to protect your idea is to get it out there fast…get it selling.”]
I want to make a quick word on non-disclosure agreements. While nondisclosures are great with factories and other things, they’re also not enforceable if you don’t have the budget or the money. Sometimes they can make it difficult to do business with. We do not randomly go with nondisclosures. We prefer to keep our information as private as possible, not talk about it too much and/or file a provisional patent, which is very low cost. If you file it yourself, it’s $130 for the filing fee. You probably shouldn’t do that but it means a relatively low cost, a few thousand dollars, for the search and the filing fees with an attorney. If you feel that you need it to disclose to a potential licensing partner, a potential manufacturer and/or distributor, we highly recommend the provisional patent as opposed to a nondisclosure.
That being said, in our group there are nondisclosures and there’s a bunch of other information and there’s a bunch of access to different attorneys that we appreciate and use that specialize in copyrights, trademarks, and patents. The ones that we’ve used that we refer our clients to, they’re available to you in the membership group, so you want to make sure you go out there. The last word I want to say on this is that the best way to protect your product idea is to get it out there as fast as possible, get it getting traction, get it selling. Your best protection is to stay ahead of the trolls, the competitors, and the manufacturers. While you want to do all of your protection and filings and all of those things, your speed at being ahead of the curve and learning what’s next and what you’re going to do means that they’re always following you and that’s your best protection plan.