SOFTWARE: TO PATENT OR NOT TO PATENT?

When developing technology, especially in high tech, the question arises as to whether the technology development should be patent protected. The short answer is yes. The longer answer is more complex and looks at all different kinds of circumstances, including the limited financial and human resources startups have.

Underneath patent protection lies a patent application, which is an important business tool for a startup’s beginnings. Entrepreneurs often hold some common misconceptions regarding patent protection, and this article addresses the major ones.

1. Can software products be patented?

If the software product includes a solution to a software tech problem, then absolutely yes. Many areas such as big data, machine learning, cyber and blockchain concern a tech problem solution, which can be patented (provided that the application meets the other legal requirements). It may become problematic if the invention does not address a complex tech problem. Protecting software inventions with patents is especially important given that a similar and competing product can be developed relatively easily.

2. Can apps be patented?

The criteria for patenting software apps are no different than those relating to patent protection for other software products. Simple apps that do not address any tech problem, however, will be difficult to patent (most apps are indeed not patented).

3. Are there other non-patent ways to protect apps?

Yes, through designs and copyrights. New UI designs can be protected by designs, alongside patents. Such protection is of great value in apps where users develop user interface dependency they have grown accustomed to, which may prevent switching to a competing app with a different interface. The software can also receive limited protection by copyright.

4. Applying for a patent is a big financial expense and the limited resources need to focus on advancing the technology.

Patent filing is friendly in cash-flow management terms. There is an initial, relatively low expense. You can file one application to start and after one year decide on other countries you may want to file the application in. This one-year deadline can also be postponed with an international application without losing the rights to the priority date.

5. I will first find investors and then part of the investment I receive will fund the patent application.

The risk: Exposure to investors eliminates patent protection. One of the requirements for being issued a patent is that the technological invention has not been made publicly available. Any advertising, including prototype distribution or investor appeal, could rule out any possibility of patent protection. Applying for a patent allows the technology to be disclosed without any cause for concern.

In many cases, an investor will want to make sure that a patent application has been filed for the innovative technology in order to avoid investing money in a venture that can be easily copied by competitors. A patent application indicates the seriousness and commitment of the developer.

When collaborating with companies, a patent application guarantees that the rights to the invention belong to the developer. There have been many cases involving collaboration between large international companies and startups that developed technology that completed the product the large company developed. Protecting the technology with a patent application reduces the risk that the large (resource-rich) company will use the complementary technology without proper startup compensation.

6. Technology is constantly changing; why should I protect now if it is to become irrelevant in the future?

The patent strategy, which is a business tool for advancing a company’s development and business goals at its current stage, should also be updated to reflect the changes the company is undergoing. Developments and improvements along the way can be protected by additional patent applications and in turn build a quality patent portfolio. Research shows that a high-caliber portfolio of patents significantly increases the likelihood of a merger/acquisition, thereby raising its value; it is therefore important to develop the portfolio and adapt to the changing needs of the startup.

The article was written by Saleit Shahar, Attorney at Law and partner in the Hi-Tech Practice of the Reinhold Cohn Group, a one stop shop for all Intellectual Property matters for startups.
www.rcip.co.il

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