The Takeaway: For startups whose development efforts lag behind a looming US utility application filing deadline, use of the “Request for Non-Publication” in US patent filing can allow them to preserve the option of shoring up their patent protection for an extended period in the future, while still retaining the priority date of a provisional application filing. This can be valuable for startups that are still fleshing out their product/market fit in customer discovery, but that also have incorporated still relevant technical and functional subject matter in their provisional application.
As people even modestly familiar with patents are aware, the filing of a provisional patent application requires followup with a US or PCT utility application that “perfects,” the earlier application no later than one year from that filing date. When the covered technology is fairly well-developed or where the client has the resources to staff an robust development team, a deadline of one year will not be a problem. For these situations, a year is enough time to fully “bake out” the subject matter for the utility application. However, for some startups, the provisional to utility filing timeline can be too short.
This can be due to a combination of things such as, a lack of resources, team inexperience, and absence of focus on “low priority” tasks like intellectual property in the “drinking from a fire hose” environment that normally accompanies the life of a startup entrepreneur. A less obvious, but often significant, reason for uncertainty about a utility patent filing is that customer discovery conducted over the past year indicated that the product described in the provisional patent application is not of a form that any relevant portion of the buyer market finds interesting. This means that the provisional patent application, if perfected into a utility patent application, might cover a product that no one will buy. In turn, any issued patent will not cover a viable business model and will end up being worthless in the future. For example, the originally conceived product can turn out to be too expensive for the likely buyer. Or established distribution channels make product placement unlikely, and it would be too hard for a startup to create wholly new distribution channels for its product. These and many other potential insights garnered during effective customer discovery activities can result in a startup entrepreneur realizing that she has not yet identified a solid “product/market fit” when competently deploying the Lean Canvas Model of startup entrepreneurship.
For some startup entrepreneurs, the business or technology pivots made during the year between provisional filing and utility filing due dates makes the decision not to file for utility patent protection easy. Looking back, it may be obvious that what was filed almost a year ago is not relevant to where the company is today, and certainly not where it will be in the future. In short, these folks are “running a race they don’t want to run,” and the provisional application will properly be allowed to expire with few, if any, regrets.
For other startup entrepreneurs, like my medical device clients who currently face a utility filing deadline, the decision to let a provisional application expire is not so easy. Customer discovery has shown this client that the format of the product originally contemplated, and that is described in detail in the provisional filing, did not meet the needs of the market. In short, hospital purchasing models and billing requirements preclude ready adoption of the early product iteration. Fortunately, the same customer discovery has shown the functionality provided by the product would be highly desirable to address a significant unmet medical need for hospitals if they can find a product design that meets buyer demands.
These startup entrepreneurs are motivated by the results of customer discovery and are diligently working toward redesigning the format of the device to make it more acceptable to the relevant buyers. However, success is still several months out, even while the utility filing deadline hits in just a few weeks. There may be still be some viable functionality disclosed in the provisional application that remains relevant to the operation of an acceptable medical device, and that will be included as a crucial aspect of the claims of a patent covering their medical innovation, so the provisional disclosure still holds considerable potential value. Notably, this is a very active area of medical research, and it is possible that others are working today in the same space and that these other innovators may file patent applications in this area. In today’s “first to file” world, it may be risky to walk away from an early priority date like this client’s. So, we collectively decided that this startup should file a utility application that claims priority to the provisional even though many modifications will be made to the medical device design over the next year and, possibly, beyond.
Filing a utility application on an innovation that is not “fully baked” for the market sets up another dilemma for this client, however. In the normal course of events, a US utility application will publish 18 months after the provisional filing date, which is just over 6 months from now. Given this client’s resources and the nature of the startup world, it is unlikely that the company’s medical device will be fully fleshed out in marketable form by that deadline. This means that their own application publication, which will not include the marketable design but will no doubt be very similar in function, can be used against them, especially in regard to combination with third party references.* Put simply, preservation of the early priority date could reduce the client’s ability to develop robust protection for a marketable medical device. Fortunately, I was able to provide this client with an option that allows them to preserve their provisional filing date, while still providing them with the flexibility to generate future patent protection that will align with their still-to-be-determined product/market fit.
In this regard, I recommended filing of a US utility application that claims priority to the provisional application, along with selection of the “Request for Non-Publication” in the filing documents. This will allow the startup’s team to continue conducting customer discovery directed toward development of the most commercially viable medical device design incorporating the necessary functionality and an associated business model, while making it possible to maintain their early priority date that will allow them to show invention (or “possession”) of the crucial functionality insights that are unambiguously present in the provisional application.
Selection of the “Request for Non-Publication” will mean that the soon-to-be-filed utility application will not publish any time before the issuance of the application which, given the average application pendency in the US Patent Office in normal processing, will be in no fewer than three to four years. The client can generally add new subject matter at a later date in a continuation-in-part (CIP) application that builds on the utility application, as long as they have not publicly disclosed it or offered that new matter for sale. Since this first utility application may not incorporate subject matter that aligns with the go-to-market product design, the client is prepared to abandon that application at a later date in favor of the CIP, which will be structured to align closely with the required product functionality and the go-to-market product.
Moreover, the utility application should not be a mere “roll over” of the provisional application. While the final product configuration has not yet been identified, the client nonetheless can add substantive disclosure to “beef up” the utility application, and generate additional priority in the utility filing. To this end, I have recommended that they build out the application disclosure to include the information that they have learned in the last year, especially in relation to “must have,” and “need to have” aspects that their past customer discovery processes have identified.
Notably, with this serial filing strategy will generate priority back to the provisional or the first utility filing (for anything that was not in the provisional application), and the priority date of the CIP for anything that is new in that application. Also, the likely future abandonment of this utility application means that we can expend less effort on the drafting process, which will allow this startup to preserve funds for crucial business activities, like continued customer discovery.
I really like this non-publication strategy for startup clients that have more work to do before they successful hit on a viable product/market fit. Surprisingly, however, I have seen very few patent lawyers who recommend this option. This can result in a loss of potential value for some clients. For example, I was recently asked to give a second opinion for a startup that has spent upwards of $30K to obtain patent protection for their computer technology-related product. Unfortunately, the claimed subject matter is not patentable under the Alice doctrine. While there is plenty of blame to go around for this, since the application published well over a year ago, the client’s ability to claim improvements to this technology, which now aligns with a highly successful business model, is now highly constrained. We are currently investigating new avenues for protection, and patents may still be possible for technology improvements that are suitably distinct from the previously published application. Nonetheless, in addition to the sunk costs expended for patent protection that did not result, considerable value has certainly been left on the table for this startup due to the patent filing strategy road not taken.
I should mention that selection of the non-publication option in US utility filing documents necessarily means that foreign (that is, outside of the US) protection, including PCT applications, will not be sought. But, for startups without “fully baked” business models likely attendant with limited financial resources, giving up this opportunity may be of little import. Moreover, integration of patent strategy into ongoing startup business strategy means that opportunities to create valuable protection will still exist in the future for startups, especially if care has been taken not to make the company’s innovations public.
I am sure that my more risk averse patent peers can name a litany of reasons why this approach is “risky.” Certainly, there is risk in this approach, at least because of the “unknown unknowns” associated with pushing a patent filing strategy into the future, as opposed to the clarity of deciding on a patent filing strategy today, and the certainty resulting from seeing something completed. But, being a startup entrepreneur means moving forward with a business idea usually in the face of incalculable risk. I find that my startup clients who are competent at the Lean Startup approach are sophisticated enough to evaluate the risks of this patent filing strategy in relation to their specific business situation, as long as they are fully informed of the suite of options available to them. Of course, this strategy is not for every startup innovator, but by writing this post, I want to make them aware of this option, as my experience shows that it may not be one made available to them by patent practitioners.
* Note: the minds of patent types will immediately go to “swearing behind” of references that still has relevance to US filings, but if you have to rely on an exception to publication, you’re not being strategic on the front end when you have the ability to do so.