Tuesday, October 11, 2011

Developing and Launching Products Without Patent Applications

Most start-ups need to use others to develop and/or launch a product while a patent application is unaffordable.  These situations present dilemmas. 

First, publicly disclosing an idea triggers a one year deadline for filing a related patent application.  In other countries, a disclosure places the idea in the public domain immediately.  Worse still, under the America Invents Act (AIA), offering a product/service for sale that incorporates a patentable idea (or attempting to commercialize the idea) arguably places that idea in the public domain.  However, entrepreneurs can avoid these penalties.

First, they should place all parties involved (including employees, vendors, alpha/beta testers, etc.) under NDA.  Secondly, they should mark all drawings, prototypes, etc. with proprietary warnings.  Thirdly, they should get the other party(s) to verbally confirm that the information involved is proprietary – before making the disclosure.  These actions usually remove a disclosure from the public-disclosure rule.

They should also plan their “offers” carefully.  To fall within the offer-for-sale rule, the offer (not a consummated sale) must be legally binding and the idea must be ready for patenting (the entrepreneur must be able to describe how to make, use, and operate products/services incorporating the idea).  Entrepreneurs should therefore compare their anticipated marketing, sales, and development efforts to determine when they expect to be able to describe the idea and when they expect to make their first legally binding offer. 

They should plan to file a patent application before 1) their first legally binding offer and 2) they can describe the idea well enough that others could make it.  Failing that, they should plan to commit to filing an application within one year in the hopes that the courts reinstate the one year grace period for offers for sale.  Of course, entrepeneuers should also plan to file an application before any public disclosures.

Since you probably find yourself in a unique situation, we at the Villhard Patent Group would enjoy exploring your options with you.  For more information about us, please see www.villhardpatents.com or call us at (512) 897-0399.  

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