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  • Jose Jimenez

First, Know the Rules: Patents and Startups

June 29, 2022

By Robert Cantrell - Registered Patent Agent


After spending most of my career soliciting business from Fortune 500 companies, one of the bigger adjustments I had to make when under the flag of the largest company in the world was to handle a swarm of solicitations from members of small companies contacting me. I grew accustomed to the change fast enough, however, and enjoyed the status afforded by this respected brand.


When the founder of a startup got in front of my boss on one occasion, and I was invited to the meeting to weigh in, I remember the exuberant enthusiasm displayed by this CEO of five people, and his excitement at being in front of, to use his words, “…a Fortune 100 company.”


My boss answered, “You need to understand something here. We are a Fortune 1 company. Fortune 1.”

This clarification helped our guest to relax.


We invited the founder of this company to visit for a reason. His team developed a solution we might have been able to use. And as I participated in more such meetings, from the perspective of the largest company in the world, I noted how often startups made intellectual property mistakes from which we could have taken advantage. We preferred, however, that such startups approach us with their intellectual property in good order. That good order made it easier for us to know what belonged to them, introduce what belonged to us, and define how we would handle new ideas from there.


If you lead a small company and wish to engage a large company, understand the resources the large company wants from you. If those resources include your intellectual property, get your intellectual property properly protected. Your ability to protect your intellectual property will be a part of the evaluation. Both entities are better off this way. No one takes pride in winning chess games because the other player did not know a rule.

 

By Jose W. Jimenez, Esq – Former Chief Patent Counsel & Registered Patent Attorney


Only late in my career did I receive opportunities to be involved in mergers and acquisitions, to experience the mindset of an acquiring company as Robert describes in his post, and to have a client participate in Shark Tank® . Such experiences allow us to take a broader view of acquiring IP protection for our client’s product or company. However, for most of us IP practitioners, even though we endeavor to protect our client’s interests by filing patent and trademark applications sufficiently to sell the product in the market and protect our client’s revenue, we may leave “gaps” or “opportunities” for expanding protection that may be of interest to investors or later acquirers of the technology or the start-up.


So, how do we make up for this “gap” in experience or perspective? Continuing legal education courses in this area are helpful. So are M&A checklists. However, once your start-up client is close to commercializing a product, it’s time to put on the hat of an acquirer, such as the Fortune “1’ company, otherwise you may leave money and value on table instead of in your client’s pocket. You may even lose an opportunity to another company because that company did a better job of filing broad IP and set up the acquirer for faster growth and higher revenue.


So, what if your clients agree with your assessment for the need for more IP, but they are constrained due to lack of funding and technical people to work on R&D. Your training as patent professionals and as engineers/scientists helps when collaborating with your clients, but even those efforts have their limits. The solution? You need to find partners or colleagues who can help you and your client be that “target” company everyone wants. Your client does not expect you to know how to get there, but they do expect you to recognize that “gap” and will welcome introductions to creative partners.


Are you ready to hear from your client about receiving a call from Shark Tank®?

 

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