Common Patent Misconceptions – Myth #2

By Osman Ismaili, April 14th, 2020

This article is part of a series on commonly held misconceptions about patents. Many prospective patentees often have unfounded reservations about patenting their inventions. The aim of this series of short articles is to debunk these common myths around patent protection.

Patent Myth #2: I don’t need a patent because I’m the only one with this technology, no one else will be able to enter the market.

This surprisingly common belief is in some ways related to Patent Myth #1. Having a quick read of that article may help with understanding the connection to this piece.

Many startups and even some SMEs often hold the view that because they were the first to come up with a particular technology that fact will somehow serve as a natural barrier to entry for others. While this may be true in some rare cases, these companies often fail to realize that other, often larger entities have well-established R&D departments that, among other reasons, are there to understand competing technologies and, in some cases, learn to reverse engineer them.

In Patent Myth #1, we touched on the case of Microsoft Corp. v. i4i Ltd. Partnership, 564 U.S. 91 (2011), where the Supreme Court of the United States (“SCOTUS”) found Microsoft to have infringed the patent of a much smaller Toronto-based company. In that case, the Canadian company, i4i was successful first and foremost because it had a patent for its document editing invention. If i4i had instead chosen not to file a patent, there would have been no infringement even if Microsoft used or copied their technology. At the very least i4i would have been gambling with the time and money they invested in developing their software.

This discussion also ties into the law of trade secrets in that a company certainly could choose to maintain its invention as a trade secret, but it may not always be appropriate. The Canadian Intellectual Property Office (“CIPO”) website states: “Trade secrets can be very valuable when you have developed new technology, designed original products, created the perfect recipe, or have a gold mine of customer data. However, it may not be the best choice of intellectual property (IP) protection if your competitors can easily reconstruct your creation.” The last sentence is precisely what companies should be thinking about when considering a patent. Even if you are the first to bring something to market, it is important to keep in mind that someone might still be able to dissect and understand it.

Never forget that maintaining a trade secret as a secret has its own challenges, and even something like a disgruntled former employee can put a trade secret into a risk of being publicized. As CIPO states, “Once a trade secret is made public, it loses its business value and legal remedies are complex.” Even if someone breaches an agreement and has to ultimately pay damages, that trade secret can still never go back to being a secret, so its value is irretrievably lost.

One final note relates to the “on sale bar” in the United States. In January 2019, SCOTUS decided in a landmark decision, Helsinn Healthcare v. Teva Pharma USA, 586 U. S. ____ (2019), that “an inventor’s sale of an invention to a third party who is obligated to keep the invention confidential can qualify as prior art under §102(a).” This means that even if an invention is sold as a trade secret, it could prevent the inventor from later obtaining a patent for it. Many inventors believe they’ll be able to profit from their invention as a trade secret for some years before they file for patent protection, but this approach may be risky, if not dangerous.

Could someone reverse engineer and/or copy your invention? If you think the answer is yes, then it’s likely you should look into obtaining patent protection. Please feel free to reach out to MBM for a free consultation.