Ch.6- Intellectual Property Strategy for Startups

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The 21st century is an innovative generation, for industries or startup c ompanies alike, keep progressing is the only way to maintain self-competitiveness. If not, as ceasing to advance and only relying on the current products to compete in the changeable market, it’s undoubtedly to be eliminated by the market someday, especially to those just founded.
However, Intellectual Property Right Strategy is the only means to attain the goal which turns those innovative thoughts into products or services and keeps competitiveness and exclusive right in the market. Hence, Intellectual Property Right Strategy is the most significant element for startup teams to survive in the competitive market.

Intellectual Property Right is an exclusive right that could keep those who haven’t acquired legal authorities from doing the same things as those who have them. Because this right could effectively stop other rivals from expanding their businesses, the owners of Intellectual Property Right usually adopt the right on occupying specific markets. Many startup companies neglect Intellectual Property Right Strategy, for they rarely conduct it while they’re short for money and resources.

Most of the startups tend to put the resources into the field of research & development. They used to consider Intellectual Property Right after earning profits. Although it is not a wrong way, it still contains higher business risk. Once they are confronted with the rivals’ IP accusations, they may be hurt badly.

Intellectual Property Right includes patent, trademark, business confidentiality, integrated circuits designs, and so on. Once the industries launch new products (broad definition of a product, containing every tangible and intangible product), it employs a tremendous amount of manpower, materials, and financial resources. If Intellectual Property Right isn’t well-protected, then the business rivals could use low cost to take possession of it by imitating, replicating, reverse engineering, industrial espionage, etc.; therefore, your rivals would launch similar products, which are similar with your original products, to participate in the market competition. The price of their new products used to be low because it doesn’t contain research and development expenditure, which greatly harms the startup companies or industries that put into high R&D Expenditure. Sometimes, these harms could be lethal.

The pros of startup companies of conducting Intellectual Property Right

● Protect your original products or services
Products, services or Business Models are the core competitiveness of startup companies. They can maintain their market leader position via the protection of Intellectual Property Right and effectively reduce the possibility of being plagiarized.

● Protect clients and potential clients
No clients would love to see their supply chain partners contain any risk of Infringement. Via Intellectual Property Right Strategy, startup companies could effectively raise reliance and reduce risks. Additionally, a well-planned Intellectual Property Right Strategy would help to attract potential clients to leave from pirates to the authentic one.

● Combat Infringers or plagiarists
Once the startup companies find the infringers or plagiarists, they could use legal means to protect their own advantages at any time. In this case, legal means are not time-consuming or treasury draining, an infringing-warning letter will bring out huge effects.

● The Intangible Property Right Technical Value raises startup companies’ valuation
If the startup companies own ideas and thoughts only, they will definitely need to raise their valuation when they meet with large-size enterprises looking for investment targets.

And the advantage of Intellectual Property Right is that could greatly increase the valuation of a company. For instance, when a company spent five hundred thousand dollars to buy a car, its maximum price is about three or four hundred thousand dollars while evaluating. On the contrary, when a company spent five hundred thousand dollars to apply for a patent, it’s highly possible to be evaluated as fifty million dollars or even higher.

● Win funds and venture capitals’ hearts
There are numerous potential investors in the fundraising market and various kind of names of them, such as Angel Investor, Venture Capital, Funds, VC, etc. When these investors show their interest in the products or businesses of startup companies, If the startups which are being evaluated could bring out an Intellectual Property Right, it could undoubtedly raise the wills and reliance of the investors.

Categories and introductions of Taiwanese Patents

According to Taiwan’s Patent Law Treaty, our patent categories are divided into three parts: Invention Patent, Utility Model Patent, and Design Patent. Simultaneously, in order to match the principle of Unity of Invention, every single technology needs to be applied separately.

Invention PatentInvention Patent is utilized to protect the creation that has been created via natural laws, including articles, arts, and uses. Priority Right starts from the filing day to the coming 12 months, adopting the anticipation of device. The examining procedure has two steps: preliminary review and reexamine, Once the application has been filed, anyone could apply Substantive Examination since the filing date onward up to three years, the term of right of the substantive examination lasts for 20 years.
IUtility Model PatentUtility Model Patent is utilized to protect the creations of the shapes, structures or devices of the articles. Its Priority Right starts from the filing date to the coming 12 months, adopting Formality Examination. The patent would be permitted right after the examination has passed. Simultaneously, a Utility Model Patent report needs to be prompted to alarm before enforcing the Utility Model Patent Right, the term of the right is valid for 10 years since the filing date.
D esign PatentDesign Patent is utilized to protect the shape, pattern, color, etc of the articles, or the combination of which that creates it. Its Priority Right starts from the filing date to the coming 6 months, adopting Substantive Examination, the examining procedure is the same as Invention Patent, the term of right is valid for 12 years.

The process of applying for the Invention Patent in Taiwan

  1. Application and examination :
    For filing Invention Patent, there are three necessary things: application documents, manuals, and essential images in order to check the patent is classified or not. If it’s violating national defense confidentiality, and being confronted with the procedure examination penalty, the parties could file an administrative lawsuit with the Intellectual Property Court within 2 months. If the result still remains unacceptable, they can appeal to the Supreme Administrative Court within 20 days and use its judgment would be the final and conclusive judgment.
  2. Publication :
    After the patent application has passed the examination, the application should be made public since the filing date (or the priority day) has begun.
  3. Examination :
    Within 3 years that the patent application has been filed, it must apply for Substantive Examination first, then conduct the examination. On the contrary, the inventor could also choose to withdraw the application of the examination. The Substantive Examination doesn’t mean to conduct a practical investigation, yet to focus on the adequacy of the patentability, including industrial applicability, novelty, and progressiveness, as matching the patentability.
  4. After the Substantive Examination has been granted :
    the processing fees should be paid within 3 months since the Assessment Document has arrived. When the mandatory payment has been made, the patent will be announced and issued a certificate to the patent owner, yet it must pay fees to renew the patent annually. If not, the patent would be invalid then. If the patent is not granted, it can be re-examined within 60 days of receiving the initial review, and if it is passed, it will be paid according to the preceding paragraphs. If it is not approved, then file a petition to the Ministry of Economic Affairs within 30 days for the administrative relief. The parties who refuse to accept the judgment can file an administrative lawsuit with the Intellectual Property Court within 2 months. If the result is unfavored, then they could appeal to Supreme Administrative Court within 20 days, and the final judgment shall be decided by the judgment.
  5. Patent invalidation :
    With the assistance of the public, Intellectual Property Office could reexamine the patents that have been permitted, making the authorization of patent right more correct. Additionally, when a dispute of patent infringement happens, the parties may request the revocation of the patent right by the issuance procedure to avoid patent infringement lawsuits. As if they are issued after the announcement and refuse to accept, they can file a petition with the Ministry of Economic Affairs within 30 days for administrative relief. The one who refuses to accept the judgment can fill an administrative lawsuit with the Intellectual Property Court within 2 months. If it is still unacceptable, then appeal to Supreme Administrative Court within 20 days, and the final judgment shall be decided by the judgment.

Related legal liabilities

Civil liabilitiesThe Intellectual Property Rights (Patents, Trademarks, Copyrights, Trade Secrets, Layout Design, etc.) related laws and Civil Code may demand removal of infringement of its rights. Where there is likelihood of infringement, a demand may be made to prevent such infringement. And accordingly, the patent owner can ask the infringers for compensation for damage.
Criminal Responsi bilitiesExcept for the patent law and integrate circuit Configuration Act don’t directly be covered by criminal responsibilities, the action of infringement listed above all contains imprisonment, arrestment, or fine. Only if the infringement is involved in the guilt of normal criminal law, needs to be sentenced the punishment according to normal criminal law.

Next Chapter: Ch.7- Investors for startup business