Patents · Licensing

Protecting ideas when using another company’s patented material in building process?

Anonymous

April 6th, 2016

I’m prototyping a product for infants that needs a protective plastic coating of a BPA-free material that only one company in the world makes and has the patent on.  Part of what makes my product unique and durable will be this coating and it has not been used in this type of product before.

1) How to I make sure that in the long run (if my product is successful) that this plastic coating is exclusive to my product so that competitors cannot rush in to copy my idea?

2) Is it a licensing agreement of some sort?

3) Is it common/likely for big companies to make such agreements for new products?

I plan on contacting the plastic maker and want to have the correct terminology and questions to ask so any advice is greatly appreciated.

Scott McGregor Advisor, co-founder, consultant and part time executive to Tech Start-ups. Based in Silicon Valley.

April 6th, 2016

If you are the first to use this material for this application, consider filing a patent application on your improvement to an existing invention.

After you have filed contact the maker of the coating and ask for exclusive distribution to a specific industry segment.

Alex Chan Co-Founder at DataNovo, Inc.

April 6th, 2016

As a long time patent prosecutor and litigator (and former patent examiner), let me attempt to address your questions in turn:

  1. If another company has already obtained a patent on this coating, using this coating on a different product (i.e., different field of use) will likely not get you exclusive rights because a statement of purpose or intended use for the invention is of no significance. If the true innovation here is directed to the mere use of an already-patented coating in a different field, your likely option is to file for a patent application, wait for an obviousness-type rejection from the U.S. Patent and Trademark Office, and traverse the rejection using evidence based on secondary consideration of non-obviousness (e.g., unexpected results, solving a long-felt but unmet need, acclaim or praise of your idea by others in the field, copying by competitors in the field, and commercial success). This option, however, is rough and expensive.
  2. I'm not sure what you mean here. Licensing agreement of what by what? Since you are implementing a coating already patented by an entity, you should consider obtaining a license from this entity. Otherwise, you might be alleged to infringe willfully (which entails treble damages). This problem is particularly pronounced because you are aware of the patent, which gives you sufficient actual notice of the claimed invention underlying that patent.
  3. Before you approach any entity, you should consider the ramification of a company using your "idea." After all, you did not invent the coating. So no rights could possibly be claimed unless you have a patent (or even a provisional patent application) filed that is directed to a system, device, or method claiming the use of this coating in combination with other elements of this "different" product. If you have this provisional application filed, you don't even need the NDA. If you get the patent and those companies breach the parties' confidentiality by making, using, selling, or offering to sell a product that infringes your patent, they get screwed anyway. That's the beauty of filing a patent application before your meeting with the big boys.
  4. Disclaimer:My comments provided here are for informational purposes only and not for the purpose of providing legal advice. You should contact your attorney to obtain advice with respect to any particular issue or problem. Use of and access to my comments within the site do not create an attorney-client relationship between me and the user or browser. The opinions expressed at or through this site are the opinions of me only and may not reflect the opinions of any one I work with or for.

Stephen Palmer Grand Master, Sovereign White Knights - 6 Peaceful Orders

April 6th, 2016

The best practice is to contact the Patent holder(s) and check the USPTO for Patent details and assignments to companies or organizations; then find out from USPTO if any Federal Funds were used in the Development of the Patent process; if so, there are additional options to consider; if not, then request an exclusive for the application for a period of 24 months with renewable options if your product goes good, otherwise, file an application Patent on the product which includes any and all materials or processes used in the application, siting the Patent numbers, or patent application numbers. Look for filing dates, publication dates, and printing dates from the USPTO. With that data an application patent can be processed either through USPTO or the US Copyright Offices. Or similar institutions in other countries. Also look for the Patent Conventions that were filed with the Patent Application; often, an individual will not ask for, nor receive an international convention Insurance on a patent. One does not have to get a Patent attorney if you do your own research, I shall give the URL of our patent as an example: http://www.google.com/patents/US20100099758 http://www.google.com/patents/US20090148540 Follow this format, and your Application Patent can go through, but at least contact the Patent Holder of the material as a gesture of good faith, and if they are hard nosed, let them know you are filing an Application Patent, and whether they respond or not, if you follow the criteria, you should have no problem with the new product using their material in that application; failure to contact them however, gives them the opportunity to block the Patent Application, Notification is what USPTO and the Copyright Office looks for, if notification can be included in the filing, regardless of the outcome of the return notification, your Patent will go through, or Copyright if that is the case.

Karl Schulmeisters CTO ClearRoadmap

April 6th, 2016

What Alex said.

If this company has a BPA free coating product, they are in the business of selling that product.  So you absolutely can get a licensing deal

And you COULD get an "exclusive" licensing deal.

The thing to recognize about licensing deals though is that they are just business deals.  What is in it for the patent holder to

  • License this use to you vs simply selling you the product?
  • Give you an exclusive license when you have no proven track record of volume sales?

Each of those would be a potential restriction on their revenues.   Which means they would want offsetting compensation for foregoing such revenues. 

IE such licensing deals are going to be expensive.  For example, lets say you want an exclusive licensing deal for your product.  Your product has national potential of 1,000,000 per month.  But you only have initial financing to afford to produce 100,000 units per month.

They will want some form of compensation for the 900,000 units per month underproduction that they could get by also selling to other competitors.   This compensation might come in the form of forgoing volume discounts as you grow above 100,000 units - it might include giving them an equity stake in your company,  It might include cross licensing to them the right to sell and mfg your idea in another part of the world

but at the end of the day, you will need to pay for it.

Henry Valk Technology | Innovator | IoT

April 7th, 2016

If the coating is your only competitive advantage then you will never stop others from entering your market because the coating supplier is in business to sell their coating to everyone they can. 

If you tie them down with an agreement based on volume and the volume is large enough to justify this, then someone else will inevitably invent a better coating.

A better strategy is to secure your own market through traditional means such as patent protection, copyright, or any other barrier to entry you can find. 

A start-up that is dependent on any one component , supplier or customer will inevitably fail.  

Curt Schulz Design and Media Consultant

April 7th, 2016

The coating is not the only competitive advantage as there it is no similar product currently on the market. But since the product is easy to replicate, I think (from the excellent advice above) that I should focus on possible utility and design patents if the product makes it past the validation phase.  
I think in the long run it would be great to be independent of a patented chemical compound and it would be great to engineer my own, but it is unrealistic for a startup and think it is perfectly normal for many successful companies to rely on licensing IP to make a better product.  Scott, Steven, Alex, Karl, Henry --- thank you very much for the great advice, it will help me prioritize moving forward.