When does disclosing a secret actually help the secret-keeper? In the world of patents and patent protection, it can be a key strategy.
Most entrepreneurs understand that an invention must be truly novel to receive a patent. According to the U.S. Patent and Trademark Office (uspto.gov), an invention cannot be one that has been previously “patented, described in a printed publication, or in public use, on sale, or otherwise available to the public before the effective filing date of the claimed invention.”
As an example, I once worked at a company that acquired a medical device patent from a physician. The resulting product achieved rapid market penetration, and the physician inventor received substantial royalty payments – until a competitor discovered that the inventor had described the concept to a group of physicians during a Grand Rounds at a small hospital a few days before he had filed the patent. As a result, the patent was invalidated, the competitor began marketing a look-alike product, and the company and inventor had to deal with the rather nasty legal business of all the royalties that had been paid.
You have to be especially cautious to not disclose a patentable idea to anyone before filing a patent, unless your audience has signed non-disclosure agreements in advance. Otherwise, it is considered to be a “public disclosure,” even if it is to one person.
You can, however, use such public disclosures to your advantage. Let’s say you are a start-up company with a patent covering your first product. A common defensive patent strategy is to file additional patents covering improvements and line-extensions to your original patent – a tactic known as the “picket fence.” In this way you create a “fence” surrounding your product, making it much more difficult for competitors to get around your patent.
These new patents are all subservient to your core patent in that they are offshoots of the original and cannot be independently practiced. As a start-up company, however, you may not have the cash to file all these new applications. A well-financed competitor, on the other hand, may decide to file patents covering improvements to your product as an offensive strategy.
By filing enhancements to your original patent, they can create bargaining chips to use with you to negotiate a cross license, giving them the right to your original patent in exchange for you to use their patents covering product improvements. It is a common and effective strategy, but it’s crucial to realize that it can also undermine your company’s competitive advantage.
A simple way to avoid becoming fenced in by a competitor in this way is to publish a description of the improvement in a paper or on your website. If you are not going to file a patent on the improvement, publicly disclose the idea so no one else can patent it. In that case your product would still be protected by your core patent.
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