Cost Deferral and Other Strategies For Your Patent Portfolio During COVID-19

COVID-19  is an event that came into existence suddenly and in a matter of months changed the way the world works. Within a very short period of time, entire countries shut down one by one and people were encouraged to social distance and find new ways to move forward and to conduct business.  As a result, this unprecedented crisis is having a significant impact on the global economy. However, it is clear that the importance and value of innovation is not affected by this crisis and it is the businesses that best position themselves and protect their innovations that will emerge from this crisis as leaders. There are a variety of cost-effective solutions for protecting inventions even if finances are limited.

It is clear that innovation will ultimately help us overcome COVID-19 in the end, whether that innovation is a treatment to cure the disease or a vaccine to stop the spread of the coronavirus.  Innovation during this crisis does not solely lie in medical technologies used to overcome the disease, but also arises in other peripheral areas impacted by the crisis. For example, COVID-19 has resulted in the proliferation of working at home through telecommuting, teleconferencing, logistics, and various other services that undoubtedly have generated innovations in the field of Information Technology, which is becoming a foundation of our economy and daily lives while social distancing. In addition, as we are slowly returning to the “new normal”, many businesses are facing new safety standards for employees and customers, such as barriers and workspace arrangements, that may lead to innovative ways to tackle the problem.

Businesses that further innovation should recognize their contributions to making this world a better place and actively protect their innovations. By protecting innovation, a business may take advantage of the incentives and rewards of their innovations down the road when things improve. The danger with ignoring innovation now is that once things improve, a business may not be able to protect their hard-earned innovations and the resources put into innovating will be used by competitors who can piggy-back off of the hard work carried out by the true innovators. In other words, it is much easier to copy a good idea than to come up with the good idea. Businesses must not ignore the need to protect their innovations during this pandemic.

Despite the need to protect their innovations and investments, many businesses going through this crisis are facing financial hardship as a result of the economic slowdown. Accordingly, spending money and resources on protecting innovations is often something that businesses cut. This should be done carefully as it increases the risks of problems down the road, such as loss of intellectual property, which may lead to loss in value of the business. 

To ease some of this financial hardship, many patent offices around the work are recognizing the effects of COVID-19 on innovation and have provided relief to varying degrees. A brief discussion on what the Canadian Intellectual Property Office is offering may be found here. Other jurisdictions providing some relief include the US Patent and Trademark Office, and the European Patent Office.

In addition to the relief provided by various patent offices to defer costs, there are filing and portfolio management strategies and actions that businesses can adopt to protect their innovations while reducing their present-day costs:

· Provisional patent applications - Sometimes referred to as informal applications, a provisional application may be filed at a US Patent Office and serve as a priority document for subsequent patent application filings around the world. Since these applications are never examined, there are no formality requirements and basically anything may be filed to secure a priority date and may even be filed directly by a business for a nominal government fee. Accordingly, businesses may cap the patent fees in preparing these applications which may save a business thousands of dollars in upfront costs. Since the document filed will be used as a basis for priority, the protection that it may provide is limited by its content. Cost savings should be weighed against the potential risks. Nevertheless, in some situations, some protection is better than no protection.

· Deadline extensions - Some patent offices are offering extensions to deadlines as mentioned above. While businesses may take advantage of these extensions to defer costs on certain actions to maintain a portfolio, the deadline extensions may sometimes have strict requirements or require certain statements be made. In such cases, the statements may introduce a risk if their veracity is subsequently challenged, such as during the enforcement of the patent. It is important to note that deadline extensions do not apply to the disclosure deadlines (i.e. filing the patent application prior to any public disclosure).

· Grace periods - Some jurisdictions, particularly Canada and the United States, offer applicants a grace period from disclosure of an invention to file a patent application. For innovations that have global applications, businesses must be aware that other than Canada and the United States, which have very broad grace period provisions, most other jurisdictions either do not have grace periods, or have grace periods with strict limitations that often preclude most businesses from taking advantage of them.

·  Confidentiality and trade secrets - Avoiding public disclosures may be another strategy that can be applied to certain types of businesses. For business that provides innovations that are easily reversed engineered, this strategy may not be an option. However, other businesses where innovations may be kept confidential may defer filing a patent application to a later date. Although confidential information and trade secrets may be enforced indefinitely through properly executed agreements and physical measures, patent protection may still be desirable because once confidentiality is lost, any trade secret rights associated with the innovation will also be lost. While damages may be sought from the party that disclosed the confidential information, recovery of any damages is sometimes difficult.

·  Identifying and evaluating new innovation - The ability to identify and evaluate each innovation is now more important than ever. Innovation is what separates one business from another and provides it with the competitive advantage. The ability to identify the innovation is the first step and a culture of protecting innovation should be established. It is this innovation that provides a business with the competitive edge and should be protected from copycats. The next step is to determine what kind of protection the business should invest in to protect the innovation.  This may involve a cost-benefit analysis based on various business considerations.

· Exploring licensing opportunities - A review of a business’s current patent portfolio may provide an additional stream of revenue in the form of licensing fees to offset costs in protecting other innovations. This may involve searching the current technology landscape and identifying potential licensees who would benefit from licensing the business’s technology. While this may identify potential infringers, it could also identify other businesses that would achieve additional efficiencies from licensing technology.

· Re-evaluating patent portfolio - The value of each patent in a business portfolio changes over time and should necessarily be evaluated in times like these. Businesses should consider patents as an asset in which they are investing and they should expect a return on that investment. Patents may provide value to a business in many ways. For example, they may increase the value or profile of a business, generate licensing revenue, or act as a deterrence to competitors (i.e. increasing market share).  While these metrics and future projections are sometimes difficult to quantify, underperforming patents or patent applications may be abandoned to reduce maintenance costs.

To determine which strategy is best suited for a business, as well as receive sound advice on the implementation of any strategy, it is essential to consult with an experienced business-oriented IP counsel who will be able to guide you on how to best protect innovation and your business during this crisis.

This article was originally published on the DLA Piper Canada website. Please view it here.