Startups Stack Exchange Archive

Protecting Intellectual property in Business plan competitions

posted by: user8338 on 2017-03-03
tagged: business-plan, intellectual-property, pre-launch
score: 5

I am working on a Deep Tech idea that I hope to start-up in. It is currently in an idea stage, and will require some funding to develop a proof of concept - read - 50-60,000 Euros and 1 year. I am considering Startup Business Plan competitions as way to start fundraising.

What are some things to consider about protecting IP when participating in Business Plan competetions?
Are there significant risks of the general idea being picked up by more competent/better funded teams?
Are there ways to protect IP in the pre-proof-of-concept stages?

Answer 12708

posted by: alexm on 2017-05-23
score: 2

I'm an entrepreneur and have little bit of experience, this is my perspective:

1) Many competitions/accelerators/etc have a signed agreement where they usually specify, that people/companies involved in it will not steal from you. However, the truth is that s**t happens, and they usually have plenty of legal holes. So use common sense, don't reveal key aspects of your core product, just tell them what is your product in general terms, what you hope to achieve, why it is viable, roadmap, etc.

2) There is always that risk, but hey... making a Start-Up is the risk itself. Don't be scared just be alert and gain as much common sense from the process as you can. When your idea is too early stage, nobody will put effort in copying you, is just a good idea 1% of a successful product, there are many things to test before making it work(this doesn't mean reveal everything, just don't be so scared). On the other hand, competition just proves you are in the right path, you can always work harder and get ahead of them, if they still win, maybe you are doing something wrong.

3) Yes, you can get a provisional patent on most countries. Or you can just keep it a trade secret.

At a competition it's totally fine to keep core aspects of your product secret, you just need to tell them how you will make the company grow over time, getting too technical is a negative thing in business competitions. (They look for a good BP, but mainly for a good presenter. 1- it is a show, so better presenters get better ranking [unless a good presenter has a really poor idea]. 2- they analyze team overall, they want to know if you will be able to pull your idea off as most good or bad projects succeed or fail because of "THE TEAM")

Adding a little bit of information on IP/Patents that you may find useful.

It always depends on your product, is it hardware or is it software?

If it is hardware and you have taken the decision to get a patent:

Find a patent attorney and talk to him/her (talk to a few different attorneys), they are usually expensive, unless you find someone who is starting his own patent business, or get into an angel plan from one of the big firms who cover part of the cost or defer the costs partial/total based on their program (these kind of deals usually happen when you are at accelerators/incubators or competitions).
Make sure you know where you want to patent your product, in the US and Europe it makes sense, in other countries you have to research first if it is worthwhile, the patent protection may not be really enforced. Per say, China, is quite a tricky place to patent stuff.
Don't think that by having a patent you are protected, common mistake. A patent only protects part of your idea. Imagine that your idea is a caw, if you don't want it to escape then you build a fence around it, a patent is just one pallet from that fence. In order to protect your product you need to build many patents which cost a lot of money, unless you are a company with it's own patent attorney (or you are a patent attorney or student on the subject and know how to make one :D). In the US, anyone can file a for a patent but if it is not well formed it will get rejected, the registration fees I believe are roughly around 2k and normally an attorney without any discount will charge anywhere between 5k to 15k US$ for 1 patent registration fees included. Example: your product is an innovation that is composed of these features A, B, C and D. so you go and patent it as ABCD, then a competitor may come and say their product is ACDB, even though the components are the same they are in a different order so it's a different product and off goes your patent.
When you are a Start-Up with low budget, you can make a patent plan. This means that you will patent ABCD today, in 3 months you you will do ACDB and you will have X amount of money considered in your financial projections, and so on, an attorney will know how to setup the plan.
Ok, that said, a patent means that your secret product, algorithm or whatever you have will stop being secret, it will be public, everyone will be able to access whatever information you publish on your patent.
If you don't have your product ready to patent but are close from it, or want to extend at maximum the time it is secret to your competitors, you can get a provisional patent, which means you will send all your data to the patent office and it will sleep on their desk up to 1 year. After that period you have to file the patent or lose it. If any one else wants to file a patent on your product after your provisional the patent office won't take their application as yours came before.

If it is software ,and same story, you want to get an IP on it:

You first need to know that until not so long ago in the US you could not patent a software product, as software itself. Well, is much easier to substitute a small piece of code from a project and say it's a different product than change an integrated DSP into a piece of hardware and make it sound the same. However, you may patent algorithms. Now days, you can apply for a software, but you have to take many considerations to make it valuable. In this case sometimes is better to have your product as trade secret and well encrypted. sometimes you may be able to patent hard and soft together, depends on how you your attorney builds it.

You will find that many investors ask you for a patent on your product to advance with investment. Many companies just get one patent so investors trust them, but most experienced investors, like series A investors, who usually make more detailed due diligences, will not be fooled by only one patent on your product (unless ofcourse you have a very specific product that only one patent would cover, if any exist).

One important thing to know is that it is always good to have a trade secret, your secret sauce. You protect this info very well so others can't copy it (doesn't seem to work too well with hardware ;-). However if your product is good, there will always be someone in the other side of the world who will reverse engineer it.

Finally, patents/IP only works on the countries you filed them and under their laws. At the time of filing your patent you may request an international patent (by paying the extra fee) which means you can file the same patent in other countries and link them to your company as an international patent.

Update: as @DonQuiKong says, you have more time for international patents here is a link that explains the case: LINK

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