Initiating an IP Strategy: Advice for Early Stage Companies in the Chemical Space.

Starting up a new business is a sizable commitment at the best of times.  Fortunately, this hasn’t stopped innovative companies emerging across the chemical space over the years, bringing new products to market, ranging from novel cosmetics, to tackling climate change.  However, for early stage businesses dependent on chemical innovation, recent times will undoubtedly have been challenging, with lockdown measures limiting how easily research teams can make it into the lab.  But with lockdown measures now easing, many companies will be thinking again how best to support their future growth.  As an early stage company grows, particularly one dependent on chemical innovation, what patent considerations should be borne in mind to support this growth and add value to your business?

To patent or not to patent

A genuine question that companies should ask themselves at an early stage is whether it makes sense for them, as a business, to pursue patent protection.  Small companies will understandably be wary of costs, particularly those already having to spend money on premises, people and raw materials.  Because of this, such companies will naturally question whether they can afford to enter the patent process – but there is value also in considering whether you can afford not to.  For example, not obtaining patent protection may risk how attractive a company appears to investors, and how seriously they take you, ultimately harming your financial position.

Another question that gets asked is, “what is the value in filing a patent application, if I can’t afford to defend it if it’s challenged”? Here, it pays to think about the long-term strategy, and particularly your exit – if the aim is to get bought out by a larger would-be competitor, then think about the situation from their point of view.  Your patent may present them with an attractive prospect to leverage against their other competitors, making your company more appealing from their point of view as a buyer.

That being said, the patent process might not be a good fit in all circumstances.  As many reading this will know, filing a patent application is effectively a deal with the public – disclose your invention to the public, in return for a legal monopoly once the patent grants.  As early as possible, it’s worth companies considering the benefit of filing a patent application vs the benefit of keeping the invention secret (if possible).  In many cases, the answer may well be that value is best added by filing a patent application, but this is by no means a hard and fast rule.

Has someone got there first?

In theory, some early stage companies might arrive at a product (or process) so ingeniously different that they find themselves in a completely new space.  However the reality for many is that, despite having a great product in development, the IP space already looks crowded.  Early stage companies should not be discouraged in these scenarios.  Freedom to operate will be the obvious concern, but there are key benefits to thinking of your own patent position, as acquiring your own patent protection can act as a bargaining chip when entering a crowded space.  Moreover, new companies shouldn’t automatically assume that their invention won’t be “inventive enough” over the amount of information already in the public domain.  For chemical inventions, patentability in Europe usually hinges on there being enough experimental data to support the existence of an unexpected or surprising benefit.  Therefore, even if your invention builds on what’s already available on the market, if it arrives at a new and unexpected improvement, then you might be eligible for patent protection.  Also bear in mind that the legal tests for patentability are often set at a lower threshold than what an individual inventor considers “clever”.

The importance of data

For chemical inventions, the importance of having the right kind of experimental data to support a patent should not be underestimated.  It is not just a question of quantity of data – but the right type, that best fits within the framework used by patent offices to assess inventiveness.  As a small and growing company looking to generate this data, direct access to laboratory facilities may be difficult – even outside of lockdown measures.  As lockdown measures ease, some might choose to solve the problem of laboratory access by outsourcing or collaborating with another party, to carry out the experimental work on their behalf.  While this potentially provides great opportunity, it is not entirely without risk, and steps will need to be taken to ensure that ownership of your invention stays with you, and does not become blurred with rights of collaborating third parties.

Regardless of how you choose to generate experimental data, companies will ultimately be faced with the question of when there is “enough” of the right kind of data to justify filing a patent.  The more time that passes, the more opportunity there is for a company to generate data, but the higher the risk of new prior art publishing that jeopardises validity – therefore, timing can be key.  Consideration of how best to strike this balance is critical for new companies.

So to summarise – weigh up the implications of filing a patent application vs keeping your invention secret, don’t be discouraged from filing a patent application if the space looks crowded, and when working in the chemical space, be sure to gather the right kind of data for your patent application.

If you would like to discuss any topics raised in the article contact Rebecca via Rebecca.Matheson@gje.com.