May 15, 2018
Haaretz Cyber Magazine
By Gerson S. Panitch; Paula E. Miller
Particularly in the life sciences arena, there is a tendency to reveal innovations and publish findings as soon as possible. These instincts stem from a scientist’s academic roots where there is a notable emphasis on “being the first to publish.” But what is best in academia is usually not best in business. In a rush to publish, inventors often forget that in most of the world, the publication of an invention before a patent application is filed completely prevents the inventor from getting a patent. So the academic mindset of publishing first can destroy the value of a company.
Why is patent protection so important?
Without patent protection, anyone is free to copy an invention. If money sits in front of you on the table and someone runs up and takes it, that’s called theft. It’s illegal. But if you publicly reveal your invention without filing for a patent first, someone who copies it is not considered a thief, but is rather considered a smart business person. Investors often make their investment decisions based on the ability of a company’s patents to block others from offering a competing solution. For no investor wants to be in a situation where, after they make the investment, the market is flooded with “me too” products, undermining the investment. For this reason, an application for patent should be filed before any public disclosure.
There is one notable exception. In the United States, inventors have a grace period of one year from the time of public disclosure until they are required to file for patent protection. But relying on that grace period is often not a good idea, for two reasons. First, it only applies to the U.S. Second, once an invention becomes public, competitors will try to think of ways to improve the invention, often before you have opportunity to think of the improvements. Competitors can then rush into the Patent Office, file patents on the improvements, and block you from improving your own product.
This is not solely a problem for people with an academic mindset. Non-disciplined executives and salespeople often can’t help themselves at conferences and tradeshows, and publically share pipeline innovations before adequate patent applications are on file. A public disclosure does not need to be a formal scientific presentation or official demonstration at a trade show. Even disclosure to a small number of people, or an inadvertent disclosure can count. So companies need to be very careful in making clear to their employees what they can and can’t reveal.
Executives often justify premature disclosures by saying, “patent protection will not help me if I can’t make sales.” But there is a middle ground. With relatively minimal effort, companies can quickly file a provisional patent application. In an emergency situation, a provisional patent application can be filed in a day, and might simply include a PowerPoint presentation and other details of a public disclosure. While a provisional patent application can provide a false sense of security, in an emergency situation, filing it is better than doing nothing.
Confidentiality agreements can also help. In most countries, a confidential disclosure does not qualify as a public disclosure. Therefore, confidentiality agreements should be used for early disclosures with potential licensing partners, suppliers, manufacturers, or other third parties.
What is the best practice?
The best practice for a company with new innovations is to not publically disclose its innovations until there is adequate time to think through not just the innovations, but also the likely improvements to the innovations, and to be the first to file for patent protection. If a public disclosure must be made, at least file a provisional patent application in advance. And if business discussions with others are necessary, make sure that you have a confidentiality agreement in place before those discussions begin. In this way, companies are best able to protect themselves.
New innovation often brings with it a level of excitement that causes smart business people to make unwise decisions, publically disclosing the invention and undermining their company’s ability to maximize the value of the innovation. With self-discipline and the strategic use of provisional patent applications and confidentiality agreements, the risks can be minimized.
Originally printed in Haaretz Magazine on May 15, 2018. This article is for informational purposes, is not intended to constitute legal advice, and may be considered advertising under applicable state laws. This article is only the opinion of the authors and is not attributable to Finnegan, Henderson, Farabow, Garrett & Dunner, LLP, or the firm's clients.
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