The days of asking grandma for money, waiting on a rich uncle’s inheritance or pestering angel investors are over with the power of crowdfunding on the internet. But beware, crowdfunding platforms like Kickstarter, GoFundMe, Indiegogo, Appbackr and Rockethub contain idea stealing hawks in addition to generous wallets.
Plenty of companies steal. Apple is notorious for stealing ideas and improving them for their own products. Other startups complain of being pressured to either sell to the big dogs or get run out by their own model of their service, which can be done bigger, better, and faster thanks to the resources major companies have. A relevant example is Instagram’s use of 24 hour stories, something that was proprietary to Snapchat and is contributing to the company’s downfall.
When going about publicly raising capital for a new idea with crowdfunding, knowing how the patent process works is crucial to protecting intellectual property. But patents can be expensive, and part of the reason for raising funding is often to finish redesigning the prototype and cover the cost of a patent.
Many entrepreneurs and inventors seek a provisional patent until they are ready for an expensive official utility patent. A provisional patent filed with the U.S. Patent and trademark Office establishes an early filing date and gives the inventor one year before they must file a regular patent. After filing for either a provisional or full utility patent application, the invention is classified as “patent pending.”
It is important to note that a provisional patent may dissuade others from copying the idea, but does not provide the best protection under law. Many investors will look for some type of filed patent before providing financing.
It’s ironic that the goals of crowdfunding campaigns can often be to raise funds for securing patent protection, but a provisional patent only costs $125, not a high price for buying an extra year of prototype experimentation time.
How do you know when to file? Being ready for patenting would be when the inventor can build and describe his/her product so that it can be understood by someone else. It is a complete and functional idea. Patents should also be filed within a year from when the invention is offered for sale.
If after one year from publicly announcing the product it is still not finalized, nothing is being offered that is patentable. The product is then considered dedicated to the public and cannot be patented. It is also important to avoid “novelty defeating events,” which could arise from publishing an invention on the internet or use of it in a public place.
After making a working prototype, the inventor has one year to file a patent application, otherwise he/she will be barred from receiving one. Additionally, once an offer to sell the invention is made, such as a thank you reward for donating on crowdfunding, the clock starts.
The US uses a first-to-file patent system, so even without publicly announcing it, timeliness in filing is important.
Ultimately, a provisional patent is a low cost way to set a date for a finalized product by buying one year to continue tweaking the invention.
Trademarking should also never be overlooked. If the company or product name is already taken, your company could be hit with infringement fines. To make sure no one copies you, trademark your name and logo before hitting up any crowdfunding platforms. Publicity is critical to the success of a crowdfunding campaign, and a mid-process name change may create avoidable setbacks.