Why Engineering Companies Get into IP Trouble: Five Tips to Mitigate the Risks

“When engineering companies aren’t prepared to effectively protect inventions, the losses can be devastating and costly.”

Too often, engineering companies are in such a race to come up with the next big thing that they forget to consider the crucial step following their grand discoveries or inventions: patent protection. If a business is willing to spend years developing products and a considerable amount of money marketing, then it only makes sense to follow through and protect the accomplishment. Yet, many (unintentionally) don’t. Below are five risky ways tech companies often jeopardize their intellectual property rights, sometimes even before a product has been developed.

  1. Lack of knowledge about what’s already in the market. The launch of your team’s best idea is forthcoming, and many late nights have been sacrificed to ensure all the quality plans have been laid out, all the software triple tested, and all the documentation rolled out (well, mostly), and everyone’s bubbling with excitement because nothing like this has been done before. Whispers of similar technologies created have been heard, but you’ve done something different, so your product stands out. Well, as it turns out, the patent office doesn’t believe it is different enough, and someone else has done what you’ve done! They just used it in a different industry. All these details matter, and when engineering companies aren’t prepared, the losses can be devastating and costly. Not only will you be facing stiff competition if the other company is selling to similar customers as you, but if they’ve obtained patent protection, you could be sued for infringement on their product and forced to pay them for profiting from their legally protected invention. Ouch.
  2. Failure to include ownership clauses in contracts. In many industries, a project cannot be completed without the help of multiple entities—vendors, subcontractors, and other suppliers. The role of a company within a contract can vary, which is why a contract should be reviewed a dozen times over before anyone signs. This doesn’t apply to only external parties, either. Engineers and designers hold the golden ideas, but when they are the employees of the brand, they may not be receiving royalties on inventions they created if they were forced to sign inventorship/intellectual property waivers during their on-boarding process with the company. These waivers typically state that the employee understands any idea they develop during their time with the company, and with the company’s resources and teams, belong to the company, and the company only. A company that hires a subcontractor to assist with a project will likely include a clause that states they retain all ownership over the final product, including data rights. It may not be in large, bold letters, but it could be in the fine print or embedded in referenced documents or links. Conversely, sometimes companies are in such a hurry to order a part or hire a service that they do not bother with such clauses and end up with an intellectual property disagreement, or lawsuit, on their hands down the line. Whether you are the customer or the client, it’s essential to have someone read contracts with a fine-tooth comb each time you are considering entering into a partnership with another entity, especially if there is a lot of money and intellectual property at stake.
  3. Not asking the right questions. The more you know about your company’s niche in the marketplace, the more you can start to position yourself for the best patent protection. Ask your corporate counsel or IP lawyer about international rights, and which countries your technology would be most useful (and therefore, more successful) in, and then you can file accordingly. The systems in Europe and Asia are different than the United States’, but you can select certain countries, and if you know the industry is booming for your specific technology, you might want to rush. If you are not necessarily in a hurry, perhaps you can focus more on development of another product. Then, pursue international patent rights in another year when the company’s budget is more flexible. On the other hand, maybe you don’t want a patent at all, because the manufacturing or design process of your invention will then become public record, and the process is more valuable to your company. That’s a big decision. Knowing your options is crucial, but you need to ask questions of your lawyer, your engineering teams, and if applicable, your accounting department.
  4. Not wanting to invest the money. When a company isn’t willing to hire an expert patent attorney to guide them through important decisions, they risk losing even more money in the long run. In the American patent system, the first to file is the first to be granted patent protection, which means that you can invent the same thing as someone else, but if they beat you to the patent office, they have priority. Even if you have someone who works in your company who has passed the patent bar exam and is well aware of how the USPTO works, if they are not well trained on how to construct claims in order to define the invention, then the patent issued may allow a competitor to still claim part of the invention, basically on a technicality. If nothing else, having someone who isn’t efficient managing your patent portfolio will end up costing thousands of extra dollars on the back end because mistakes or corrections cause the relay between you and the USPTO to take longer than necessary—from not filling out forms properly to a typo in an equation or a severe error in what is being claimed. Some things simply aren’t worth the penny pinching, and patent protection is one of them.
  5. Patent trolls. While engineering companies can take preventative measures to cover all their bases, the most challenging area of patent protection to navigate is prosecution by so-called patent trolls. Patent trolls buy patents for the sole purpose of using them in litigation against other companies in hopes of gaining settlement rewards. While not everyone agrees that patent trolls are actually a problem, and many tech companies have faced lawsuits and come out on the other side, the costs can be significant.

For startups and companies without corporate representation, patent protection can be tricky to navigate, but inventions are valuable property and once stolen could be financially crippling to litigate. Therefore, do your homework, and don’t take shortcuts when it comes to patent protection.



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Join the Discussion

6 comments so far.

  • [Avatar for Night Writer]
    Night Writer
    August 21, 2019 01:47 pm

    @5 constantly changing the rules of the game for the rest of us – peons – and that includes you and the rest of your profession

    I agree.

  • [Avatar for angry dude]
    angry dude
    August 20, 2019 10:21 pm

    Night Writer@4


    you are talking like patent law is something like thermodynamics laws

    Its not even “black art” as you say – I would respect black magic

    Its “dirty art”, if I can even use the word “art” – some corrupt and dishonest folks in power position constantly changing the rules of the game for the rest of us – peons – and that includes you and the rest of your profession

  • [Avatar for Night Writer]
    Night Writer
    August 20, 2019 02:15 pm

    This is a good article. I’ve seen first-hand a couple of good companies waste a lot of money because they didn’t invest the money to figure out what was out there and then engineer around the solution.

    Another issue I think –and this isn’t going to sound too good–is that based on what I’ve seen there are a lot of attorneys out there that will give small companies bad advice about fighting rather a patent infringement lawsuit. You are almost as better as a small company to design around and negotiate. Another issue is don’t waste your time on this stuff. Get a good patent attorney to do the work for you so you don’t have to think about it. There is nothing more ridiculous than a great engineer trying to get their heads around patent law. It is a black art that takes years to understand and frankly makes no sense.

  • [Avatar for Eileen McDermott]
    Eileen McDermott
    August 20, 2019 12:51 pm

    Thanks for alerting me to that comment via this comment, LadyPhD. Unnecessary, irrelevant, and trashed.

  • [Avatar for Lady PhD (EE) + JD]
    Lady PhD (EE) + JD
    August 20, 2019 11:17 am

    Misogyny much, Dave? Did the term “patent troll” trigger you?

    And, Angry Dude, why are you venting at Susana? Nothing you’ve said addresses any point she made in the article. Sure, Apple and other big companies can harass smaller companies using their patent portfolios. She did not say they couldn’t, only that the term “patent troll” is typically used to refer the the types of entities she described. Which is true. And, yes, these people come out of the woodwork whenever a startup gets even a whiff of success.

    This article makes several good points about problems that, in my experience, MANY small companies create for themselves. I appreciate Susana taking the time to write it and potentially help inexperienced entrepreneurs avoid costly mistakes.

    Have a nice day, gents.

  • [Avatar for angry dude]
    angry dude
    August 19, 2019 10:21 am

    Dear Susana,

    Reality check: US Patent system is broken

    Disclosing valuable technical know-how in publicly disclosed patents is like shooting yourself in a foot
    This said, if some product is about to hit mass market it makes sense to file some bs patent application(s) on obvious product features that can be easily reverse-engineered and copied while keeping really important things (like embedded software algos) a trade secret.
    A good example would be the patent co-owned by Mark Cuban (and discussed here in detail) on self-balancing board which, according to granted patent, can somehow self-balance, but the patent just doesn’t tell you how… go figure…

    Talking about patent trolls… Who are real patent trolls ?

    If you care to look at high-tech patents from Apple etc – most of them are like that – claim some novel products with novel functionality but don’t tell your how to build those products from scratch. NOT ENABLED. Period.
    Those are real patent trolls – Apple and the rest of SV big tech

    “Steve Jobs” patent and sh1t like that

    Please do your homework before writing about something you have no idea about…

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