When is it time to patent your technology?

Startups working to solve consumer problems sometimes create technology that has the potential to become an industry standard. This may be a de-facto standard, an industry standard approved by a formal standards setting body, or something mandated by law.

These standards exist in almost every facet of our lives, from the functionality of the devices we use to communicate, digital media files, electrical energy supply, to the production and packaging of the food we eat. 

Companies make substantial investments into research and development to secure the lucrative reward of patenting industry standard technologies. Not only must other organisations adopt these standards, they must also pay royalties to the owner of the patent in order to use the technology. In the mobile phone industry, for example, designers must incorporate industry features into their handsets to allow them to make and receive calls, handle digital media files and communicate wirelessly. For businesses, standardisation acts as a catalyst for competition and positive change. This greatly benefits consumers too, ensuring that products have reduced costs, enhanced performance and improved safety.

Earlier this month, Nestlé announced its creation of a biodegradable wrapper for its UP! bar. This is a great example of an invention which has the potential to become the de-facto industry standard, meaning hundreds of companies would adopt this sustainable technology. With an estimated 8.3 billion tons of plastic produced since the 1950s – of which only nine percent has been recycled – this technology could have a substantial impact on the growing plastic pollution crisis. The paper wrapper has a polymer coating which makes it concurrently waterproof, sealable and robust enough to weather the production line, transportation and storage. The genius lies both in its recyclability and ability to degrade within six months in the ocean.

Yet although Nestlé has been praised for ‘sharing’ the technology by not patenting it, this is a misnomer. The assumption is that the grant of a patent would somehow prevent the technology becoming widely adopted – which is plainly wrong. There are many technical fields where standards essential patents exist and yet the associated technology is commonplace within a competitive market. 

Sharing patented technology can be good for business

The growth in popularity of electric vehicles, which cause far less pollution than petrol or diesel cars, has been unprecedented amongst consumers. Despite this, there are still barriers stopping these vehicles from entering the mainstream. According to Elon Musk, founder and CEO of Tesla, “electric car programs (or programs for any vehicle that doesn’t burn hydrocarbons) at the major manufacturers are small to non-existent.” Manufacturers like Tesla recognise the need for a unified charging system to make it more convenient for competitors to enter or expand the EV market, reducing demand for traditional vehicles powered by fossil fuels. This is why Tesla opened up its charging station technology to encourage adoption. Naturally, it hasn’t opened up its car designs in the same way. 

Another sector which systematically shares and uses multiple patents is the mobile phone industry. A few years ago, Bluetooth 3.0 incorporated the contributions of more than 30,000 patent holders, including 200 universities. Now, it is estimated that there are more than 74,500 key 5G patents in existence. Despite the stacking of patent royalties across multiple patent holders the adoption and availability of the technology has not been hindered by these patents and the underlying cost of the intellectual property. The opposite seems to be true - patents encourage innovation and its commercialisation in this field.

When should startups patent technology that could become an industry standard?

It’s no exaggeration that, when patenting industry-changing technology, timing is everything. Acting early is vital, even though it can create a tension between exploring the idea further in-house and garnering outside support for standardisation. Startups with disruptive technology should apply for a patent as soon as possible – and before making the technology public – whilst making sure not to compromise on the quality of the initial patent application. The patent application must be well written from the outset; mistakes at this stage can prove costly and possibly impossible to correct.

For those who are serious about pushing the technology to an industry standard level, there are two main paths they can take. The first, applying to sit on the relevant standards setting body for a technology is a great way of steering the idea through to adoption but is often too time-consuming for founders to juggle alongside their business commitments. Another option is to lobby government or industry regulator to make your technology a legal standard. Nestlé could have taken this path and used its well-known brand to throw weight behind its bid, then letting the market use it on fair and reasonable terms. A start-up would likely have acted quite differently when assessing the potential to patent the technology. 

For those who believe their invention has the potential to become ubiquitous, patenting with the intention of market standard adoption is a complex but hugely rewarding route. Even if the technology fails to become the industry standard, a patent will transform the idea into a tangible – and sellable – asset, providing evidence to potential buyers that it is novel and inventive.