By: Richard A. Neifeld, Esq.

If you own a startup business looking for financing, you should already have (1) acquired your IP rights (patents, trademarks, and copyrights) and (2) cleared your business of any IP infringement. There is a saying in the law, “don’t sleep on your rights.” If you do not affirmatively acquire what could become your IP rights, you will lose the opportunity to do so, and you may have allowed someone else to obtain those rights.

Investors and competitors respect the value of patents and trademarks. On the flip side, investors shun the risk involved in a startup that fails to assure that its product or service is not infringing another’s IP rights. Startups that have not conducted sufficient IP due diligence are often sued for infringing another’s patent or trademark rights. Startups often fail to recognize that the suit could have been avoided with appropriate foresight. For example, the infringed IP rights could instead have been obtained by the startup — if it had acted early enough. Alternatively, an early due diligence search could have discovered that another entity owned the IP rights that covered the startup’s proposed product or service, thereby providing time for the startup either to redesign to avoid infringement or to negotiate for a license to the IP rights.

Many startups are under the impression that if they are the first to invent a technology, they are immune from suits on patents obtained by subsequent inventors. It is true that the United States is characterized as a “first to invent” country, which means that the first to invent should ultimately prevail in a patent dispute on new technology. However, that impression is misguided. Patent infringement suits are expensive. A defendant can incur unacceptable costs in mounting a defense. Thus, the defendant could win the suit, but be driven out of business due to the costs of defending against a charge of patent infringement. Moreover, patents are presumed to be valid. 35 USC 282. This means that a defendant must show by clear and convincing evidence that a patent is invalid to successfully defend on a patent invalidity basis. For a defendant to win on the basis that the patent is invalid because the defendant invented the technology first, the defendant has present evidence to show by clear and convincing that it invented the technology first. That is not always possible, and it is never easy. Thus, by far the most prudent course of action is for a startup to obtain patents on the technology that it invents.

Substantial information on how to acquire patents and trademarks is provided at the United States Patent and Trademark Office’s web site, which is http://www.uspto.gov. You can obtain additional information on patent law and related information at my web sites www.neifeld.com and www.PatentValuePredictor.com.

This article was authored by Richard A. Neifeld, Ph.D., Patent Attorney, who is a partner in the Law Firm of Oblon, Spivak, McClelland, Maier & Neustadt, P.C., Arlington, Virginia and can be reached at [email protected]. All rights reserved by Richard A. Neifeld, Esq.