Dr Paul Loustalan is a UK and European patent attorney at Reddie & Gross, an internationally renowned firm of European and United Kingdom patent, trade mark and design attorneys based in London and Cambridge. He has expertise in advanced engineering, automotive, materials and consumer products. His PhD focused on fuel injectors for direct injection spark ignition engines and was sponsored by two large automotive manufacturers.
Ahead of his workshop at the ‘Funding for Deep Technology’ Fair on November 8th, we asked him about the importance of IP protection in Deep Tech and why NDAs can be dangerous.
Why is IP protection particularly important for Deep Tech start-ups?
IP protection might be the only way Deep Tech start-ups can prove they have anything to investors. One way to get through the ‘Valley of Death’, which exists between pure research and a product you can sell, is by showing investors that you have intellectual property.
What’s the most common mistake tech-driven start-ups make regards IP?
There are a few!
One is leaving it too late. There’s always a balance between filing patents early, having the money to do so, and doing it late enough to have sufficient information to put in the application.
If you leave it too late, you can suddenly find you need to be talking to people and showing them your invention. But once it becomes public, that’s it, game over, and you can no longer apply for a patent.
Often start-ups think they don’t have anything to protect. These people have potentially been working on a project for many years in-house. All they can see are the incremental progress they’ve made from previous iterations. But they have to take a step back, look at the bigger picture, see how far they’ve come and protect their innovation.
Many Deep Tech start-ups look for partnerships with bigger players. What advice would you give them regards protecting their IP in the conversations?
File as much as you can before that first conversation. If you have key ideas you want to protect, then file a patent application before that first meeting. Even if you have an NDA. NDAs are notoriously difficult to enforce and once your idea becomes public that’s game over for your patent protection.
Any conversation should be under an NDA because you could make a crucial leap in those meetings. Make sure to file a new patent application as soon as possible after the meeting; they may well be trying to file their own patent applications.
Protect yourself as much as possible until you get to know how the bigger player operates. But if you go in thinking they will steal your idea, they will not want to work with you because you’re going to be awkward.
Can you give us an example of a start-up you helped successfully?
The ones we’ve helped recently are surprising large. Despite being start-ups, they’ve secured enormous amounts of funding and are filing huge numbers of patent applications. They are not unicorns but some of them are not far off.
One of these start-ups is developing an electric vehicle. The owner is a bit of a serial entrepreneur, has invested quite a lot of his own money and has a lot of additional investors.
They are very much using IP to build their company. They are building up an IP portfolio because they see themselves entering a very crowded market. And they can see in the future that they’ll potentially be batting against some very big players.
If you have a sufficient amount of your own IP, you can always end up making some sort of deal. You can end up cross-licensing your IP so you can both operate in the market, without ether one being taken out.
Why is IP protection so crucial for an exit strategy?
IP might be the only thing that your Deep Tech start-up has. One way to get through that period between pure research and finding a way to commercialise the idea (the Valley of Death) is to not go through it at all. Develop your idea, develop your product, incorporate your IP and sell off your IP. Your only asset is your IP and some people exit at that stage and sell their portfolio.
Late-stage start-ups might go further and get to prototypes and perhaps initial sales. Whoever is buying them is going to see that they have a product which is protected by IP and hopefully no one else is going to come into that market.
The third scenario might be major investment from investors and/or corporations. They will either take you on and let you continue running your company in their company, or your company will be wholly subsumed by theirs. In all those situations your IP will be a key asset.
Dr Paul Loustalan will be heading a workshop about IP in Deep Tech on November 8th at the Funding for Deep Technology Fair. Book a ticket and find out how you can protect and commercialise your innovation using patents and trademarks.
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 any action in reliance on it.