In recent years, crowdfunding has become a hugely popular way to raise finance to launch new products and start new businesses. With the global crowdfunding industry predicted to more than double in size in 2015, entrepreneurs from around the world are rushing to raise funds on platforms such as Kickstarter, Indiegogo and Crowdfunder. In their haste to launch a crowdfunding campaign, however, entrepreneurs should not forget about the importance of protecting their intellectual property.
While the need for intellectual property (IP) protection is by no means unique to the crowdfunding sphere, entrepreneurs who are seeking to bring a new and innovative product to market should be wary of the fact that launching a crowdfunding campaign immediately reveals their precious idea to the world. Where traditionally a new product or invention may have been pitched to potential investors confidentially, crowdfunding campaigns disclose the invention to the public. If the invention in question has not already been protected with IP rights, this can be problematic for the following reasons:
If You Have Not Protected Your IP, You May Be Unable To Stop Third Parties From Exploiting Your Invention
In order to provide potential investors, or ‘backers’, with a realistic idea of the product in which they are investing, most crowdfunding platforms require that projects show a prototype of the product that is being funded. A well-produced video demonstration of the prototype may be an excellent way to attract backers, but it may also reveal the workings of the product to potential competitors who, in the absence of any safeguarding intellectual property rights, are free to bring copycat products to market.
This situation occurred in the case of LunaTIK, which raised nearly 1 million dollars on Kickstarter in 2010 to launch a watch strap capable of converting an iPod Nano into a touchscreen wristwatch. Despite the popularity of the product and the success of the crowdfunding campaign, imitation versions of the product soon appeared on the market, reducing LunaTIK’s market share.
While unregistered IP rights, such as copyright, UK unregistered design right and unregistered Community design right automatically protect certain creative works and designs under UK and EU law, when it comes to stopping infringers these rights typically offer much less scope than registered IP rights such as patents. For an innovative product, registered IP rights are desirable.
Once You Have Made Your Invention Public, It May Be Too Late To Patent It
For businesses based on technical inventions and product-based concepts, applying for a patent is the best way to protect an invention from being copied by a competitor. In order for an invention to be patentable, it must be novel (new) compared to everything that is in the public domain. This means that a patent application for an invention must be filed before that invention is made public.
Under UK and European patent law, this means that disclosing an invention on a crowdfunding platform can prevent you from patenting the invention later on. If you wish to obtain patent protection for an invention, it is important to seek advice from a patent attorney before launching a crowdfunding campaign.
Entrepreneurs interested in obtaining protection in the UK and Europe should also beware of articles on crowdfunding which originate in the USA and state that following public disclosure of an invention there is a 12 month window to file a patent application. This ‘grace period’ is a feature of US patent law, and does not exist in the UK and Europe.
It’s Never Too Late To Seek Advice
If you have already disclosed your invention in a crowdfunding campaign, don’t despair!
You can still protect your brand by applying to register a trade mark, and it may still be possible to obtain registered design rights to protect your product design. It may also be possible to obtain patents in certain countries (like the USA) where grace periods are allowed under national law. In addition, if any features of the invention have not yet been made public, it may still be possible to obtain a UK or European patent to protect those features.
These options mean that even after you have launched a crowdfunding campaign you may be able to protect certain aspects of your IP. However, some of these options are available for only a limited time once you have made your invention public, so the sooner you seek IP advice, the better.
If you would like advice on how best to protect your intellectual property either before or after launching a crowdfunding campaign, please do get in touch with one of our attorneys.
Are you still unsure about the value of intellectual property to your business? Click here for more information.
This article is for general information only. Its content is not a statement of the law on any subject and does not constitute advice. Please contact Reddie & Grose LLP for advice before taking before any action in reliance on it.