PATENTING OR NOT? THERE’S A CASE FOR BOTH

Is patenting your idea always the right thing to do?

By Nicky Godding Business & Innovation Magazine Editor-in-Chief

A brilliant idea needs legal protection. An an inventor surely needs it prevent others from copying their idea, so they can secure a financial return on their investment in research and development more quickly and maximise the potential of the business.

But securing a patent can be expensive, and is your idea really that novel?

When it comes to deciding whether to seek to secure a patent for your idea or not you really need to think about the reasons you are doing it, according to Dr Reuben Wilcock, Head of Ventures at investment specialist Blackfinch, where he leads the company’s EIS Portfolios which invests in early-stage tech start-ups.

EIS stands for Enterprise Investment Scheme, an HMRC-run scheme that helps younger, higher-risk businesses raise finance by o ering investors generous tax reliefs.

And Reuben should know. He’s a Royal Academy of Engineering award-winning entrepreneur with a PhD in Electronics and 15 years’ experience founding and growing technology start-ups. He joined Blackfinch in 2019.

In 2013, his smart home energy spin-out, Joulo, won a British Gas Connected Homes award and was acquired by Dutch company Quby in 2014. He also co-founded Bar Analytics, which enabled global brands to monitor beer quality and sales. Reuben was a leading figure in entrepreneurship at the University of Southampton and in 2015 founded the university’s start-up accelerator, Future Worlds, where he mentored more than 200 entrepreneurs and 50 companies.

He said: “There are lots of reasons why you might want to patent your idea. If you have a business where the value of the company really does hinge on the collective value of your technology, there can be very good reasons why you would want to patent a product or process.”

He cites Wotton-under-Edge-based global manufacturing superstar, Renishaw, as an example. “Renishaw has a clear strategy around patenting. It sees its market advantage coming from the fact that it has strongly protected its proprietary cutting-edge technology. That tech will have resulted from extensive investment in research and development over many years. The best way to protect the future returns from those developments is through patents.”

We should point out that there are other, less costly (albeit often less effective) ways to protect your idea.

Trademarks are a relatively easy way to protect a brand. Design registration prevents competitors copying the look and appearance of a product. Copyright provides automatic protection for creative works.

As an entrepreneur, and before he joined Gloucester-based Blackfinch, Reuben was no stranger to patenting ideas.

“Sometimes I’d seek a patent for an idea knowing that if granted, I would be unlikely to afford the costs to enforce it. However, that patent would still act as a deterrent and give credibility to the innovative nature of the product. It was a strong marketing tool when securing customers or investment.”

But there are sometimes arguments for not patenting an idea, he said.

“To patent an idea, you’ll file a written specification of the method and apparatus, in order for it to be searched by the patent office. The moment you do this, the clock starts ticking and 18 months later it will be published.

“When it gets published, you’ve told everyone how your idea works, so there is a danger someone could benefit by finding a work-around.”

Some companies will get around this by filing obfuscation patents, hiding their idea in plain sight. This is where a patent is filed focusing on something the business has no intention of following through, throwing others off the scent of its real plans.

Patents will often help secure financial backing, but does an inventor need a patent to secure investment?

Not necessarily, says Reuben, from his own experience.

“In our portfolio we have some brilliant companies that do have patents, but some equally brilliant companies that do not.”

Since 2019, Blackfinch has invested more than £2 million into innovative start-up Kokoon, which has secured a number of patents.

“Kokoon is a sleep technology company whose bio-sensing headphones can monitor and adjust audio when the wearer falls asleep,” Reuben explains. “The company’s newly-released Nightbuds are comfortable to wear in bed and the connected app delivers relaxing audio and soundscapes. By continually monitoring and tracking the users’ sleep journey, the app can adjust the audio to help protect the user from disturbances throughout the night.

“Kokoon’s patent protects that feedback loop.”

Another Blackfinch investment was into Cyclr, which doesn’t have a patent.

“Cyclr is a technology tool which helps businesses integrate their software with hundreds of other software platforms. The company’s technology hasn’t been patented, partly because software is difficult to patent in the UK, and partly because they want to keep the knowhow they have created away from competitors and put all their efforts into rapid growth.

“We invested because the founders are brilliantly executing the company’s growth and have strong traction in the form of high quality recurring monthly revenues.”

But Reuben warns that even when a patent is successfully secured, a young business is often only 10 per cent of the way there.

“Patenting an idea, if that’s what you want to do, is just the start. You’ll need to take that technology, commercialise it and put it into a form which is industrially relevant. Then you’ve got to set up a company, recruit people and develop a sales pipeline. It’s a huge job.

“We look at many factors when investing in companies, with technical defensibility being high up on the list. Sometimes that defensive moat comes from tangible IP, like patents, but often it is in the knowhow of the team. When making an investment we value a patent in the context of the strategic part it plays in the company’s overall life cycle.”