S2 E7: Intellectual Property Strategy for Hardware Startups with Troy Grabow

📍 Have you ever had an idea for a physical product that you just knew had the potential to change the world? Maybe it was something you dreamt up in your garage or a solution to a problem you encountered in your daily life. Whatever it was, you knew it was a winner. If only you can turn that idea into something... You are not 📍 alone!
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My name is Sera Evcimen and I'm a mechanical engineer, hardware enthusiast, and hardware mentor. I've had the privilege of working with numerous hardware companies that are passionate about solving some of the biggest challenges in the world. And I will be your host as we explore the exciting and complex world of physical product development.
Hello, you will shortly hear an episode about IP law and , intellectual property. Due to the nature of this episode, please note that the information presented here is for educational and informational purposes only, and does not constitute as legal advice.
We strongly advise consulting with a professional legal advisor for any intellectual property concerns. I hope you enjoy the episode.
Welcome to the Builder Circle. Today I have Troy Grabow with us, and we're going to talk about IP strategy for hardware. And the reason that this this particular topic was selected is actually because of the Building Together initiative that I launched before I launched season two, where one of my listeners said and I want to quote them because they wrote it so succinctly patents are a shadow realm to most, As a mechanical engineering product developer, I constantly worry about coming up with interesting or novel approaches and designs.
The largest reason for this is navigating the patent landscape. It's daunting. I have spent a sum total of days reviewing patents that might have claims that could impact an interesting design I've developed either for myself or client. Then on the other side, this patent confusion, you have the equally debilitating question of should I patent my idea or design?
Is it worth the expense? And how do I know that? So with that, I got Troy and thank you so much for being on the podcast. I'm so excited to have this conversation with you to help listeners with this problem.
Yeah thanks so much for having me. I'm delighted to join. And this is the first time I've actually done a podcast. So this is very exciting.
I'm so happy that you are on. Troy, just our listeners have a better understanding of who they're listening to, could you give a a brief kind of summary of your background, what you've worked on? It's quite impressive so I'd love for the listeners to know.
Sure. It's often very difficult for an attorney to give a brief summary, but I will try to comply with your instructions. Okay, sir. Yeah I'm a patent attorney by trade. I'll give you a little bit of my background. I'll try not to make this like a full, eight hour autobiography. So I went to a engineering school for mechanical engineering up in upstate New York.
And then I had a hunch I wanted to try patent law because I had some mentors in College who had gone down and been patent examiners and I also worked at GE and there was a patent attorney who was from my school that inspired me and I went and I got a job down at the U. S. Patent and Trademark Office in Washington D.
C. As a patent examiner and I quickly found that I had this huge number of role models that all got, that were all going to law school usually at night at one of the four or five great law schools in the D. C. area, and I just followed my role models, and I got into George Washington University, which has got a great night program, specializing in I.
P., continue to work in patent office, and then about halfway through law school, I did a common route, I switched to a law firm, and went into private practice, and finished my last two years up of law school while working at Finnegan Henderson, which is one of the At the time, it was the largest IP only law firm in the world and and got my degree.
And then I got an opportunity to clerk at what's called the federal circuit. Which is the federal appeals court that hears all district court patent appeals as well as most appeals from the Patent and Trademark Office. So it was just such a great opportunity. I went and did that and I went back to Finnegan Henderson.
They treated me well while I was in law school. Went back there and did the usual. I was an associate and then I was a partner for about about six years. And while I was there, I got to handle like a real wide range, mainly in the patent area of patent prosecution, as well as patent litigation and patent counseling, but the clients that I really liked in the work that I enjoyed most wasn't these massive patent litigations that had 10 attorneys on that that would go on for years and years.
The ones I really liked were the small clients. It really get to know the business and learn and provide more guidance and get to know the people there. And I got a little burned out from doing patent litigation and raising a family. So I I decided to go in house and my wife wanted to move out to California and I got a really cool in house job in Southern California.
I got to live in Santa Monica. And worked there for two and a half years, and then Silicon Valley called, and I got a really cool job offer at a fun company called Pax Labs, where I spent the last four years in an area I'd never worked in cannabis vaporizers. It was a spin off of Juul Labs, and they had all kinds of just amazing hardware, firmware, software, design elements.
And it was really a neat opportunity and I worked closely with the hardware and the firmware and software teams really on. Every part of the product development life cycle. And I was there for four years took a little time off. And then I just recently at the end of 2023 opened up my own private practice called Grabow law.
And I'm really specializing in working with startups and small and medium enterprises to counsel them on creating value from IP and protecting IP and having processes for maximizing value and making sure they're not infringing and all that kind of stuff. So that's where I'm at right now. It's
That is such I feel like you've touched upon a lot of the like the life cycle of patents all the way from the downstream and now at the upstream, which is really cool. And I like it. There is, it's clear why. I was introduced to you and that you would be a great person to talk about all of these really difficult, sometimes strategic decisions that hardware startups need to make while juggling so much, but also having to create value through intellectual property and core competencies.
So it's really critical. Before we jump into the kind of nitty gritty of this, I want to give you a little bit of background on what we're actionable advice questions. I do want to have you tell the listeners about a particular litigation that you were a part of that I think is really fascinating and fun that involved one of the largest social network platforms in the world.
I won't use words,
fun to talk about it now because at the time I wasn't really allowed to talk about it much. And I think I'm allowed to talk about now it's been 10 years so I was involved when I was a young associate. I guess that's why it's been 20 years, pardon me. I was involved as a young associate in a case that was filed against Mark Zuckerberg by the Winklevoss twins in Massachusetts.
And my law firm had a client that was the Winklevoss brothers father's accounting firm, and they needed some additional expertise. And I had the opportunity to, at some point in time, be the sole associate, because there was other associates involved in the the case that they made the movie, The Social Network, about.
And they really took the plot of the movie from the very detailed. Complaints and amended complaints that were filed in that case by the lawyers, which I had never really seen that done, but it was a trade secret case as well as copyright infringement and unjust enrichment and some other state law claims.
And so just thought everything was under seal, except for the original complaint. And so I had a chance to. Work on that case, soon after 2004 when it was filed. And it was a lot of fun when the movie came out, I think, in 2010 and going to see it with my wife. And she was very upset that they didn't have a character that looked like me.
That's, that's just really cool. Not a lot of people have the ability to say that they were a part of something like that. That was just in a way, pretty historical and also just popular media nowadays. So
and it brought up, the case brought up a lot of the. Type of issues that we'll talk about today, such as the importance of having contracts, written contracts in place to have understanding of who owns what and what's going to be done with it. And the importance of, if you're going to keep something a trade secret, really keep it a trade secret and steps that you take.
So there are actually a lot of lessons from the case as well too.
Absolutely, I'd love for for us to touch upon those. I think super critical. Okay, so let's bring it back to basics and talk about what is considered IP. Because a lot might I feel like a lot of people might have an idea of what IP is but specifically, it would be helpful if we could go through examples of just what can be IP, what isn't, and why that matters.
Sure. And I'll try to keep it real high level. Each of these topics, any IP attorney worth his weight could talk about for three straight days. So this is a very kind of broad topic. Generally IP definitely is really like any work or invention that's the result of creativity.
That you can obtain rights for and some examples that you know, we talked about a lot of course is for an invention. There's a couple of different routes that parties can go that they can file a patent as long as certain conditions are met. And we'll talk about some of those conditions, but another option for an invention is trade secret.
And that's when you might want to protect an invention that you decide not to file a patent for, can be a variety of reasons can be the exact same inventions you might file a patent for, but if you've taken reasonable precautions to keep secret, it might have more value as a secret, such as, you always hear about the Coca Cola recipe.
That's a secret. That's a great example. If they'd filed for a patent, it would have expired 20 years after filing. And no one has really been able to reverse engineer it and they've been able to protect a lot of it from trademark and the branding and stuff. So trade secrets are something we'll talk about now today as well as patents.
And then of course, most everyone knows about trademarks trademarks, or just really anything that indicates. The source of your goods and services can be a word, a slogan, a design, combination, can even be a sound, can be a scent, can be a color, at least in the U. S. we can, it's very broad what you can file for trademarks on.
And examples of that are things like, Apple and Nike and Pepsi, of course. And then something that's very important for a lot of software engineers is copyright. And that just protects original works of authorship. We'll dive in a little bit more about, what's required to get a copyright, what can be, artistic works and poetry, novels, but also things like computer software or architecture. And then you asked, What is not IP? Anything that falls short of being protected, above, like for patents. You can't get a patent if it's been disclosed over a year earlier. So you're barred from getting a patent or, and that's the same for trade secret. If the invention is known in the public, you can't get a trade secret.
Could I ask, a specific question about that? With IP, and I think these are where it gets murky for a lot of hardware companies, and they don't know how to deal with it, where it's maybe the, let's talk about say, a system, and it has a lot of subcomponents, and it's an existing system, and But the, novel thing that a company has found is like small different parametrizations of those subsystems.
Like the same subsystems might exist somewhere else, but that, that small dialings are what makes it function in a very specific way. Is that a patentable thing or not?
Yeah first of all, I want to start out with that most patents are improvement patents.
They're not foundational brand new pioneering patents. If you can get a pioneering patent and, open up a whole new industry, that's great, 99 percent of patents are improvement patents.
And they can be based on a combination of known elements. Things that have been out there, but they have to be novel is the first thing. So it hasn't been done before exactly like that. And then not obvious to a person of ordinary skill in the art that I'm trying not going to get into too much legal.
I won't throw any acronyms at you. I promise. Okay.
appreciate that.
and that's just like a whole number of tests that you look at and, you get a good attorney and you talk through look at, was this like unexpected did you have some commercial success? There's all these different factors that you look at to see whether like a combination of known elements that hadn't been combined before can be patentable, and you get some results that people didn't expect.
Gray area too. It's like some of it may be not so much some
oh, yeah, it's all a gray area
others.
because you're going to be filing the application to us patent trademark office and you typically initially will get a rejection from the patent examiner. And a lot of it just has to do with. having skilled advocates that are persistent and persuasive and convincing, working with that patent examiner, whoever you get to get a patent.
I see. Okay, that makes sense. Okay, so diving right into some of the concepts that you mentioned how do you claim I guess what are the claiming methods? You talked about patents, trade secrets, trademarks, copyright. How are these different from each other? Could we dive into that specific
can, but let me do one spiel. Your last question, why does it matter?
Oh, yes,
this is very important. It's important for engineers to have this ready when they go to their boss. And they've got a good idea and the person, some people, for instance, in the software space are anti patents and stuff.
So what part of it is you need to be an advocate for your idea. So that you can get things filed. And one of them, the most important one, probably it hits the bottom line. It's just for most startups. There's not a lot of capital assets. It's really the intellectual property. The know how is usually a substantial majority.
Of the value of a company. And, if you're trying to get funding or you're in a crowded space, there's a lot of competitors out there. Let's it's really one of the number one questions that funders ask. When I was at my last company, I met with just about any funder that had any substantial amount to go into a capital raise, and I spent a lot of time with every single one of them.
Going through patent portfolios and seeing the filings and if you've got some just decent filings, that's it's almost necessary to get a special amount of funding as a startup.
Yep, definitely. That's a good point. I think, if What is considered to be IP as an engineer. I think that's just a really important thing to know, because then when you come up with something, you can be the person that raises your hand and says, I think this has value. And that proves tremendous value for a startup, because as you said, usually with hardware, specifically because of very long lead times and like all of these things people don't have physical assets that they can present for fundraising oftentimes.
Yep, and if you have had the training and the knowledge, you can bring this up earlier than right before it's time for, I spent a lot of time with my product team and the product development roadmap and, there's all these different milestones and events, that need to occur that usually involve sending drawings out to a manufacturer or to a partner or to, getting to that next stage.
And if you can recognize that there's IP and do it earlier, you're more likely to be able to get this stuff filed versus if you don't recognize it to the last second of the day. This, the drawings need to go out the door to your manufacturer to, do some test manufacturing.
Totally. Yeah. Good. Very important call out.
Okay, let me answer your question, but how do you claim IP and different claiming methods?
Yes.
And please just cut me off like on any of these and ask follow up questions because this did pretty open questions for a patent attorney. Alright, so for most IP, you do need to file papers officially with the government and we talked a little bit about that before when we were talking about patents.
And the first step you really do before you do any filings, you take a look and determine whether the inventions are new and non obvious that I talked about. You need to make a decision on whether you're going to file for patents or file for trade secrets. Most time you go ahead with with trade secrets, you go ahead with
What's the difference? What's the genuine difference of those two methods?
Sure. So with a patent, you're going to get an official grant. Of what your property right is from the federal government from the US Patent and Trademark Office I don't know. I'm not sure if they still send. I think they just stopped sending the paper once if just recently but you would in the past, you would get a piece of paper that's got this gold.
seal on it that you could show off to people and then you can look in the back and you got what's called the claims. They have a long written description at the end. He's got a claims and the claim is like the deed your property. And it spells out how broad, how narrow it is, what's included and everything like that.
And with, when you get that patent, you get certain things, presumptions of validity, you can sue, there's all kinds of different things. But with the trade secret there's no filings that are done at all. There's all kinds of steps you need to take. You need, because you need to show that you, number one, have not publicly disclosed that concept.
But then you also need to show that you've taken reasonable precautions so that it has not gotten out into the public. And obviously the only time the trade secret litigation occurs is when somehow that thing that was the trade secret got out the door.
And so you need to show that you've taken these steps and like a lot of companies I've set up many trade secret programs and policies for companies.
They include things like, marking things with the appropriate confidentiality legends on the top. Not only marking them, but following them and then having processes and procedures. If this is you've got your Project X, you just call it project X. You don't let the world know and have a long descriptive thing of what it is.
And then you only allow access to people who need to know within the company. So there's all kinds of steps like that, that you can set up so that you can later on try to number one, most importantly, you don't want to ever have to do a lawsuit. You want to have these steps actually work and the precautions work so that your idea does not get to a competitor.
And if if it does get out that you can show you've taken these steps and you can stop them and make them return the information get damages. Yeah, anything like that.
Okay. Patent is more on putting a claim and grant of property right around the idea or system or whatever has been developed, which, within the scope of the patent. Trade secret is it's not shared it's very internal. And I guess this might be a question that listeners might not know of but when a patent is out there, other people, can they use it?
Can they license it? Can they pay royalties? How does that work?
With the patent 99 percent of the time, there's some exceptions for the federal government can use some patents, but 99 percent of the time, the patent is the exclusive right to what is claimed. And you do not, there's no, you're not required to license it. In some countries when you know when there's health issues or something like that can be what's called compulsory licensing, but in the US, the right to an exclusive right to that invention is yours. You can, of course, license it, and many companies use a licensing model with respect to patents to gain revenue. Most, more companies that I represent are used for competitive purposes and you use it to make sure your competitor isn't getting too close to your idea, borrowing from your idea in a way that they shouldn't.
And you often also get It's smart to have a wide range of patents pending. You keep them in the pipeline by doing what's called continuing applications. And have applications, if possible, that come pretty close to what your competitors have. And is a defensive method to keep them from suing you because you might be able to assert your patent rights back against them.
Interesting. That's super that I did not know. With, okay, so we covered patents, we trade secrets and then trademark and copyright is, more on the creative or branding side? Is that a correct statement,
Generally, except for, I would say that some of the copyrights that you get on software, are very similar to the type of thing that you're making decisions on whether or not you get patents on them because you can get patents on software, but there's a lot of restrictions. So that's why copyrights and ends up being the more powerful tool.
But yeah, you're exactly right on. But generally it's trademarks and copyright. Do you want me to talk about trademarks a little bit?
Sure. Yeah, a little bit would be great.
So for trademarks, there's a few requirements. As I talked about before, trademarks are really only to indicate the source of the origin of goods or services. That's really what the use of a trademark is. And there's a couple of requirements. Some are similar to patents. A trademark has to be distinct.
It can't be generic or merely descriptive of goods, such as something that let's see, when you talk about like apple, like you can get, you can't get a trademark on apple for fruit. Because it's descriptive,
Yeah.
so you can't do that. And then, but you can't can no longer in 2024 get a trademark for Apple for consume computer products, because then it it wouldn't be distinctive because there's already a company out there that has got.
Apple and it would cause confusion. The test is really with it likely to cause confusion in the market. So those are a couple of examples of some of the requirements to get trademark application. You file that at the US patent and trademark office. There's a trademark examiner similar to a patent examiner.
That examines and will then issue a kind of a notice of allowance. And then in the U. S. you need to show that you are, using the the trademark and like in most countries. And so you have to file samples of showing specimens of use. And then then you get your trademark and then there's maintenance fees and everything like that.
We'll talk about that a little more when we talk about costs. With trademarks, it's in, it's interesting, at least for IP and areas, it's interesting. I won't get too much into this. You can also get common law rights. Just which just means if you just start, you put a sign up and you start to, up with a name for a company and you just start to do it without filing.
You can get some common law rights without filings, but there's huge advantages to having. Registered rights, just like with patents is presumptions of Libby. You can then sue in federal court. Just like the pads, you can get damages and increased damages if you've got proper filing. Obviously, most.
And I, I'm obviously not a patent attorney. I don't possess any of the skill set nor knowledge that you do. But one thing I do know about trademarks that I will just mention and you can verify me as I do is when Say you're either starting a startup or you're deciding on what to name your product.
It's really important to look if a trademark exists. Because I've also heard a lot of people make a lot of investment into branding and logos and fancy schmancy stuff, but then they find out later or they actually get started. sued because someone already has a registered trademark on it.
So before you, I did it, like when I was building critique development, I looked at it to, my lawyers looked at it to make sure no one has a trademark of the LLC name. Because then you deal with like unnecessary legal stuff that no one really wants to.
Yeah, it's absolutely a best practice to both for patents and trademarks. I'll talk about trademarks mainly. That was a question to do like a formal court. Trademark search. You always do an informal one first. You don't need to reach out to lawyers initially because you can, it's very easy to get on the U.
S. Trademark Office website and just do a search and you type in the name and you can see which trademarks are out there. That's always a good idea. And then if it comes to something that's really, very important, like naming a company or like naming a product, you should really do a formal trademark search.
They're relatively inexpensive. There's great vendors out there and your attorney can, send off to the vendors and that because that they've got incredible database nowadays, as you would Just imagine in the day of AI that, look out, for websites and marketplaces and foreign trademark offices, as well as, of course, the U.
S. trade market database. And I also suggest if you're doing that particularly if you're going to, you're talking to your in house lawyer and outside lawyer, you have a list of your preferred names, As well as the second choice, the third choice and the fourth choice and have those and just provide that to them so that they can because they might quickly look and see that your first choice is just out the door.
And it's good to be ready and have that second choice because most of the time. As this is like the startup world, things are moving fast. And it's helpful to have some backups and stuff. So yes, absolutely do trademark search. And the same is true for patents. It's If it's super important, critical core asset, you should be doing patent searches to determine both patentability as well as thinking about whether other companies have got patents that they could assert against you.
Excellent. Okay. I want to go back to the question that one of the listeners asked of just how do you convince yourself of spending the money and time to claim a patent? What are some metrics to consider? One, is it not a good idea?
Sure. This is there's not like any one
There isn't an equation.
But I can give you like some like most things you hear from lawyer, like it depends, I'll give you some factors you can think about. And some of these are pretty much a no brainer. Number one, like how important and crucial is the technology and innovation to your core business?
Yeah.
And one test that I usually give is I kind of force people to think, I often will hear some reluctance to, because patents are expensive. We'll talk about that a little bit. It's time consuming. It's a long process and stuff. And once I get some reluctance ah, we don't really need to patent that or something like that.
And kind of this little anti patent bias. But then when I asked them, look them in the eyes and and I give them exact example, I name, I always name a competitor. And say, no, what if they released a product that was like this? And I like describe it and just like a tiny bit different than what they're doing.
It almost always, they're like, Oh, we would, we would go after them and this and that. And I'm like, okay, if you don't have patents, like how are you going to go after them? Oh, and there are different competitive ways, obviously you got to compete in the marketplace and stuff, a patent can be a very valuable asset.
To is very valuable tool to force people to give you a little bit of space into, let you have your own lane there.
Like that. I think that's a really good question to ask because that is telling it could be something like if your competitor came out with this exact feature, what would you do? And it might be the answer is that's okay. We have all of this other stuff that's actually more of our core competency.
And that's like a good litmus test. I like that.
yeah, it is. And when I ask that question, I'm often surprised oh, yeah, this has been out there for 15 years but attorneys don't always know. I try to know what my clients are doing, but it's the engineers and the people on the ground. Or what's a lot of the product people usually.
Have a pretty good idea of what's out there. Marketing people can be helpful, but always verify with your product.
definitely.
And then, there's some time where patents aren't a great idea. One is if you can protect it by. The invention by Trade Secret.
Once in a while there's it's for manufacturing processes and stuff like that. Easy to design around if you get a patent and you'd rather just keep it internal and something that you can wall off that part of the plant so other people don't see it. There's, there are a lot of times where, you know, a trade secret is.
A better way to go. Once while you find out that half of it was designed in open source communities or something like that. And it's gonna be all kinds of sticky issues as to whether you can even file a patent for that idea and whether you have to disclose it and stuff. There's all kinds of.
Issues like that, as well as in some areas it might not be patentable subject matter. There's some software areas that are really tricky to get patents in.
And, the other thing is with startups, a lot of times, there's very, there's limited resources and filing the patents isn't really the most expensive part, but maintaining them and then starting to go.
Overseas is super expensive. We'll talk about that a little bit more on some of your, I see you've got some questions on cost.
Actually let's dive into them right now, because I think it's a really important point. Because that is, it's like, when you're making a decision in a startup, it's all about the trade offs. And as you mentioned and alluded to when it comes to IP, the acquisition and maintenance. Not only is time consuming, it is sometimes technologically difficult just to be able to articulate certain parameters and all of that stuff, and it's costly because it's law, and lawyers are expensive.
So if you could give examples of roughly costs or how much time it takes and any other information that you'd be comfortable sharing, I think it's just very valuable. everyone.
Sure. Yeah. And the numbers I'm going to give you are just general numbers. I'm super active in an organization called American Intellectual Property Law Association. It's got 10, 000 maybe 8, 000 IP attorneys and they publish. Numbers every two years and their economic survey. So I'll just give you some numbers from there.
They're not necessarily representative of what it would cost if you were to employ me or a big law firm or, like a really inexpensive shop down. But generally, people always like to know numbers. I normally hear thrown around or up for the kind of initial preparation of a patent application.
She numbers. I hear some eight to 10, 000 for a simple. Mechanical invention in 12, 15, 000 for a more complicated electronics application, something like that. But greatly depends on, what the situation is how well you've got drugs already, how much your attorney have to call you a hundred times to get the information, like it can change, it changed.
Change dramatically, and it can really change depending on the billing rate and the billing arrangements
It's like a bunch of asterisks on the cost, but it's still good to have at least a an understanding of ballpark, like where it lands.
yeah, and then typically what the process is. Once the application is filed, it's right now the latest number before you get what's called a first office action in 95 percent of cases, you'll get what's called the first office action from the patent and trademark office is from a patent examiner.
There's an individual patent examiner that will review your application. We'll look at the description. We'll do a search for what's called prior art and issue a first off section that's usually takes right now 20 months. It's been as high as 24 months. But it's about 20 months right now. And then typically you get.
You'll have a number of months to respond three to six months to respond to that. And once a while it can be just to fix up some objections for some typos. Most of the time you have to, you're responding to the office action, arguing that for instance that prior art really doesn't apply to the claims that you've got.
And I think it's common to have one or two rejections.
Mhm.
And then each of those obviously got to pay your attorney for those and, that can greatly depend. It's at least a couple of thousand dollars for each of those responses. And then then hopefully you get what's called a notice of allowance.
And then within a few months, the within a couple of months, the patent issues with the US patent number on it. And most companies, if it's core technology, you file, what's called the continuing application. You keep that application alive and you go after some claims that might be narrower, might be broader than you got before there could be all kinds of actions by the patent office that restricted what you could go after.
And you might want to go after different things and you do that. So that for a lot of reasons, but including, your competitors might design around your patents a little bit. If you get them very narrow. So you typically have that. And then there's all kinds of other costs that come up, such as foreign filing within a year of the provisional application you've got to file foreign applications and oftentimes people file what's called a patent cooperation treaty application that you can then use in 180 different countries to file what's called national stage applications and people mainly file that because it's.
It's not that expensive and it buys you time, you can get like an additional depending on who you file you can get 20 or 30 months from the original application. And then,
how much do these cost? Like the the notice of allowance and the continuing application, how much, sorry if you already said it, but I missed it.
yeah, so issue fee is not a lot I think it's under 1, 000 for In most cases, don't look that up. It's generally something like that. They change the fees all the time. And then continuing applications are relatively inexpensive. You'll spend some time with your patent exam, your patent attorney trying to figure out what you want to go after, but you're mainly using the, all the description and all the drawings from the original application.
Gotcha.
Yeah, so you don't have that up front 10, 000 or 15, 000 that, that time was already was already used to get you a good specification to file.
And then. And then I did want to address one thing that people always have a lot of questions of because very important and that is what's called a provisional application versus a regular what's called the utility application, a non provisional.
Oftentimes I advise startups to file provisional applications. Because they want to, first of all, they want to have patent pending, like it's very important to them that they can go into a meeting and say, yes, we have patents filed. And number two, a lot of times they're still developing the idea and they want to show it to people, hopefully under NDA is like very strict.
Terms and just like good partners, but it's, you really want to file provisional application before then. And with big companies, once all it's not as important because they're not looking for funding and showing around and they're doing all of the engineering right within their company.
But, startups, a lot of times there's other. Parties that they're working on to co develop. There's the key is if you file a provisional application, you really should do all the same stuff you do with a non provisional application and do a really good job and have a detailed description. And drawings and I like putting claims in there too, because the provisional application only has value.
If you can then later rely on it for what they call priority. When you file your non provisional application needs like support the non provisional application so don't go off and spend 100 to file a provisional application because it's just going to do, it's going to harm you more than it's going to help you.
Gotcha. Interesting. That makes a ton of sense, and I was going to ask about that, so you beat me to it. That's perfect.
Oh, there's one other thing I want to mention too. You had mentioned it before. And it comes up with respect to provisional applications and that stuff. And that is patent applications in the U. S. and throughout most of the world, they end up publishing and being made available to the public 18 months after you file them.
And so that gets interesting where you're a company where the product development timeline is longer than that. So you will have many times, and happens to all the top companies, that, A product that is going to be coming out. Is disclosed to the public before the product is out in the market, but that's just, one of the trade offs of filing for the patents.
By that point in time, you're pretty close to probably getting the application examined and stuff.
That is a good callout. Specifically, I guess that's more on the marketing side of things. Could be an issue if it's a secret.
The engineers have already moved on to the next project. Yeah.
But it's a, it's definitely important to note, and specifically if you are going in a direction or an application that you don't want your competitors to know yet, or something like that, like structuring it and filing it in like a, in due time, but within reason, like that is a trade off.
That's, I think, a really good note.
Yeah. And back in the old days, once in a while you would before new law came out called the AIA my first acronym, American Invents Act that came out 10 plus, about 10 years ago I think 2012, where that came out, once in a while, you would advise clients oh, why don't you hold off on filing this application stuff because you didn't want it to, publish too early and get out of the world.
You don't do that anymore because the rule is really first to file. Maybe it's first vendor to file in the U. S. It's really first to file. You need to get that initial application filed as soon as you can, because if someone else files it before you. You're really out of luck.
So it's really, it's a race to the patent office nowadays. And you just have to make sure you're aware that's the trade off for getting a patent. Is that the government grants you this monopoly, this exclusive right over your invention, but in return, the big return is you dedicate it to the public and you let the world know about it.
So that they can so that the world can read about it and make improvements on it. So that's the trade off for a patent for getting that exclusive us, government generally doesn't like to give monopolies on stuff to private individuals, but this is, 📍 one example where the, decided that it's worth that.
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Okay, with that.
 Cool. I really like to do a podcast break where I ask my guest about a hardware horror story and usually we're, like, talking about manufacturing and, like, all of these things, but I'm wondering if you have like the liberty to share or even if you've read about it and you thought it was interesting of just like an IP, a hardware IP horror story that you can talk to.
You're like, I have 14 million. That would be just so fun to throw at our listeners, even if you have a few, that it's just more fun the more horrific, the more fun it is to look now, hopefully it's not, someone's not going through it at the moment.
Okay as most of the global economy, a lot of manufacturing is over in China.
And the most interesting, really interesting IP issues that I've run across when I was in house both companies I was at, almost exclusively manufactured over in China. And they would, over in, the different regions for whatever type of products you got, there's often.
Factories door to door to door that all make that specific type of product. It really requires. A lot of due diligence on your part and some things that I've seen occur over there are things like you, I think we're gonna talk about this a little bit later on, but you have manufacturers over there.
That you have got some agreements with the agreements with some of the Chinese companies. If your startup always aren't always the the strongest in the world. And, we've seen manufacturers go and file for patent applications on the product that, you ask them to make.
Wow.
And they're often not forthcoming about it when they do get called out on it.
I've heard it several times and I've had peers do it. They look you in the eyes and say, we filed this to protect you because you have not, we didn't, we knew you hadn't filed patent applications yet and we're just filing just to make sure that, there's protection for all of us.
Cause we all have a vested interest in that. And And it's rather, it's very commonplace. It it happens all the time. So you really need to, we'll talk about this a little bit more with your suppliers, but you need to have a presence over there. You need to audit them. You need to know them.
There's all kinds of things like that. And the other thing is not just patents. It's fairly common to not companies. I shouldn't say that. Oftentimes it is companies that you have got a relationship with in China. If you have got any distribution or sales in China. Yeah. That's a whole nother world.
When you've got sales in China retail stores, distributors and stuff will often file for trademarks. In your company's name, and they'll file it, not just like in your name in the English letters, but they'll file what's called I think, trans alliterations. I always mess up that word that are, if you're speaking Mandarin.
It sounds to them like your company's name and they'll find a file of writing and they're often hard to find like they don't pop up because it's a variation of the English word so they might not come up in your regular searching that you do, a lot of.
A lot of companies, and I recommend most companies you can do it through your outside counsel.
You can do it separately. You have what's called a monitoring service. It's actually pretty inexpensive that looks out for trademarks that come up in, registers throughout the world and they'll pop up. And it's not a great feeling if you're in house counsel or getting ready to launch something over in China and these marks have been filed that are prior to your filings at times.
Wow. I always think about, I think when I was listening to how I built this the woman CEO of Swell was talking about exactly that happening where she was producing stuff in China and they basically I either trademarked or patented it. In China and was they were distributing it under the same logo and name and she found out at a trade show.
Where she came across it in a in a booth that she did not, was not aware of, had no connection, business connection to. That's really scary, like when you go, when you have that and this is the biggest fear of most startups when they want to work with Chinese vendors because of the price break is that this part gets pretty hairy and tricky.
Oh,
Yeah. And some of the more well known examples are like Apple ran into a lot of issues with a, I think it was iPad or iPod mark that was out there and much of the press made it sound like it was a bad actor situation. It really wasn't. There was a company over there, that had some computer type stuff.
That my understanding, that on the iPad mark and they had it 10 or 15 years before Apple even came over there in the press, they made it out as though like, how could anyone dare, assert the iPad markup against Apple. But my understanding is that Apple didn't really. dot their I's and cross their T's.
And I think they even had a settlement agreement with the company, but it was the wrong company. It wasn't really the rights holder. It's really complicated. Some of this stuff is really, it's not even bad actors and stuff. And and also over in China, like they're really good at manufacturing products.
Quickly, with precision, stuff like that is just different societal, there's different norms in the industry with respect to some of the stuff that occurs over there with things falling off the distribution line, or, the other nightmare that I run into not really specifically with my company, but is that third line.
That they start manufacturing in the middle of the night a line of goods that you didn't really know. And. When you find out about it, it's often oh, no, we did this so that we would have adequate inventory so that when the Christmas season comes, we would have more, there's often like an explanation, but it really need to get your IP agreements in place and be present and,
you have any recommendations of how like what specifically people should watch out for or put in place?
yeah, if we're talking about for like suppliers and things like that don't just use, yeah. Old supplier agreements that have been used before that your hands, that was at another startup. It's really important to have really clear terms with respect to, particularly if you're ever jointly developing.
Intellectual property, which happens all the time with manufacturers you're sending prototypes back and forth and you're making changes. Often there's a reason you're using that manufacturer. You often use them because, they solve problems and they've got really smart people who've got, engineering degrees, many of them.
So you just need to have like real clear terms of understanding in writing as to who's going to own the intellectual property. And then not just having the agreements, but like having a culture of intellectual property, where people on your team, the engineers and product people really understand the importance of intellectual property, the importance of being on the lookout for red flags.
For instance, in your supply chain or, I see counterfeits training your marketing people that when they, they go to a trade show and they see something that looks like yours or a gray market good, where they reporting it to who they need to so that you can quickly jump on and clear up these quote misunderstandings that can occur within supply chain or manufacturers or even with your retail stores.
Gotcha. Actually, you just hit a really good point, and as we get to the end of the podcast, I do want to talk about we, We'll get to the common pitfalls and how they can be avoided but I think one thing is co development situations and governance around who owns what, specifically in the instance of, I think, one tricky scenario that I can think of is when you are Going to a supplier and you want to do a co development, oftentimes it's because you trust some core competency they have more than yourself right?
And your core competencies and they might be building something that is. Like a potential product line for them it can be a product line for them because it's their core competency. How do you navigate those waters? Because I feel like it's really hard to develop a situation where it's a win because you could Thanks co develop something with them, and then if they give you full exclusive rights to it, then they won't be able to sell it to someone else.
If you don't get that and they can sell it to someone else, now you've created a competitor for yourself, and potentially even a supplier for your competitors. So how do you deal with that?
Sure, yeah, this comes up all the time. Because you're going to this company that might specialize in, developing, very specific part that you need with a certain material that gets these properties that no one else can do. And
manufacturing process that like
yeah. And so you're using them because they've got really cool stuff and you like, you've met them and you like them.
You want them to be successful. You want them to continue to do all sorts of great things and come up with. new developments in a few years down the road, their next idea you might incorporate. So you don't want to take away all the value of that kind of what they call background IP. And you're probably not going to be willing to pay for that.
They probably spent years coming up with that technology. So oftentimes, you need to come up with, it's really usually cross license agreements. Where, because you're often times paying them to figure out how to engineer to put it in your part to put it into your product.
So you have these kind of joint development agreements with licensing and what do you often have is what's called like field of use restrictions.
Such as you might want to be the only company that can use that part in a GPS sensor. That's used for x, y, and z and they might not be interested in that they might not have any other.
Customers that really want to use that, you have to pay more, obviously, to keep the restrict them from doing things. But you should have things like field of use restrictions. Once while you have like a license, this might be for limited time, you might be fine with just having that exclusive right to use that for three years, three years, move on to something else about that.
Or you might just have a geographic limitation that comes up all the time. You have no desire to Go into the European market and you're not going to, and it doesn't bother you. So by having those restrictions, it allows them to maintain, value because they can use it for everything else other than the field of use that you've got it in or the other geographies and stuff like that.
So that's a win for both situation for both companies, but it takes a lot of negotiating, a lot of back and forth make sure you have, some good counsel that. Are advising, but you really need to have these agreements. Another thing I just want to reiterate you don't want joint inventorship of IP if you can avoid it.
It's usually much better. It's just a better. Best practice like anyone I know is to define who's going to own the IP that's developed and it can have restrictions and stuff like that. But joint ownership of IP causes just so many headaches down the road. And then other thing is you need to get the inventorship correct. important. And again, patent attorney knows how to do it and ask the right questions and stuff. But if you do not get inventorship correct a person can pop up that, is usually outside of your company because you're within the company. You usually have the obligation to sign it, pop them, say, wait a minute, I should be an inventor on there.
And the way it works in the U S. Every inventor individually has the right to fully license make and use patent.
So you need to really get it right and make sure you are claiming IPs that's Matches up with the inventors you've got, or you need to change your, change the inventorship and make sure you get an assignment from that third party.
That makes sense. And I guess there are also these edge cases, and we don't have to get into the details of those, but if specifically a supplier or a manufacturer is supplying you an integrated system, not just the sub a component, but an integrated system that is, again, their bread and butter.
They have product lines or something along those lines. They might not be comfortable with you knowing what's going on. They might be giving you a box that has the functionality that you're asking for but they might have do you have any thoughts on this part where they say you can't reverse engineer this but Like you need to know say that box you integrated into something else within your product and then a failure happens and you need to identify where the failure is from and maybe it's coming from the box and you need to open the box to do that.
Like how would
I don't have any great solutions for that. I've run into that a few times. I've run into it more with like formulations that other side, like trade secret and, you have different things like, two people can go into a room and talk about it and figure it out, without any, without a camera, without any papers and stuff like that. There always almost does need to be some disclosure of information that one side doesn't want to disclose, but once while you can limit it. So that's not the crown jewels. But yeah, that's, it always makes it very tricky, particularly when you're trying to file for intellectual property.
And, one aspect. Of the mechanism or whatever it is. You don't have full disclosure. So a lot of times, like when you file IP, you need to just file it, like very narrow disclose that, the other stuff is known before and that you're, your IP you're filing is very narrow, very narrowly focused at like exactly what you did.
Interesting. Yeah. So there's not like a really a way around it. No, no way to potentially negotiate that, but more so deal with it and deal with it in ways where you can segregate and be
There probably is. I, I just, I hadn't really thought about it. And I, a few times I've run into it. We haven't found great solutions. I'm sure there are solutions that are out there.
Okay, cool. I'll hand it off to you to do the, assessment of just common pitfalls that you've seen, and how people can avoid it.
Sure. And we've already talked about, a bunch of them, for instance, on the supply chain and stuff like that. Yeah, I won't get into in code development. We already talked about that. I'd say some real easy ones. Not easy, but is new employees. Yeah. Employees and departing employees.
A lot of times when, startups or even big companies are hiring employees, part of the reason they're doing is because they've been super successful and doing similar things, at another company. And and that's great. You want to hire people who are successful and are innovative and all of that, but it's really important to think.
And be sure that you are not going your company is not going to be asking them to disclose any of these. Things that are confidential and the other side might have intellectual property on because you can get all kinds and it happens all the time in cases that Silicon Valley, all of the time, where you know companies come in and they use know how and intellectual property that their previous.
Employer developed and has got rights to so what you need, you need to get good procedures, processes and procedures. I know at startups, it's hard to do those, but, you can come up with, you can spend 10 minutes and come up for a process doesn't need to be super formal, but it shouldn't be in writing just about having intake procedures for new employees.
Where they need to affirmatively sign and be explained to them that, they can't use any of the intellectual property that they had from the previous company, who to talk to if they are tempted to do it or asked to do it. As well as a full disclosure of what they can disclose with respect to any patents that they had before.
And a lot of that can be done in training as well to, they really to have that as part of any like new employee training, even if it's 5 or 10 minutes is, training on IP both what they shouldn't do, but then what they should do if they come up with ideas and. It's them towards the process that you want your company to have for when they come up with ideas and stuff.
And then the same thing occurs with departing employees. Departing employees are once in a while not too happy with, when they're leaving and they've got lots of innovation in their heads that they developed and once they have innovation in the cloud and on hard drives as well, too.
So you got to have real clear off boarding of employees. In writing that says what they can and can't do, you should have them sign things. And that should be usually it's almost like a condition of something, it can't be, they're still entitled to their pay and past pay you gotta be careful about that.
But with respect to a lot of times, they had bonuses or there's like different things that they want. It's like a Cobra plan or something like that to the negotiating. You need to make sure you get them to sign and affirm that they're not taking any intellectual property.
Yeah. That makes sense.
So one more common pitfall is just. As a patent person, when you go in house, it is scary when you go to the startup, it's just making sure you don't have premature disclosures of the technology before patenting occurs. In the U. S., you have one year from a disclosure, in most cases, to file For patent rights, but that is not the case throughout the rest of the world and the rest of the world often is just as important like filing patent patents in China is often as important if not more important than filing in the US, if you get buyers over there and you're doing manufacturing and stuff.
So you need to have this kind of like training of employees. When they first joined, working with your product development team, your marketing team, just stressing the importance of checking with your IP council or checking with whoever is your designated person, just to make sure that you're filing for IP prior to Disclosing and then, just because some company has an NDA doesn't mean you should have 30 companies with NDAs and disclose your, crown jewel IP, you're probably better off filing an application so you don't, so that it doesn't get leaked out and stop you from, getting IP protection.
Awesome. Those are great. I think super important because it is a high risk for startups because it is their genuine value in the very early stages. So I think that was excellent. Just to wrap the episode up, do you have any just advice beyond the stuff that you've already said, words of encouragement or caution for the founders and hardware teams that are listening to this podcast?
Yeah, I haven't really given this much thought, but I can tell you in my experience at the smaller startups, things happen fast. And once while you need to make sure you're just pausing a little bit and it can only be, it might just be a minute or two and just reflect on whether something or not, whether something is valuable intellectual property, whether you should be doing filings and then for your investors you It really helps to have intellectual property filed and to have a level of sophistication so that you can get the funding that you need to move forward and just your partners.
It is just a whole level of respect that you get if you filed for the patents beforehand. Once when you start meeting with partners and they haven't filed for any patents or even thought about it and It doesn't necessarily it doesn't always reflect well But oftentimes you find companies like no we're going to go trade secret with this we put a lot of thought to it and that's fine too, but just get you know, get good advice And when you get advice if you're looking for patent attorneys or IP attorneys, ask around, talk to your peers don't just search the net and find like the cheapest you find.
It really helps having a good, IP advisors to to guide you through this process.
Awesome. Thank you so much for being on this episode and giving so much actionable insight, valuable insight that is just not searchable and not obvious. So I greatly appreciate your time and your expertise. Try.
You say my talk was non obvious. I like that as a patent person, very key in this show of
you go. That was not on purpose, but I am proud of myself.
Yeah, I think subliminally it it sank in. Thanks so much for having me. I really appreciate it. And just good luck to everyone listening and feel free, of course, to reach 📍 out if you'd ever have any questions you can find me pretty easily. Okay.
Awesome. Thank you.
Before diving into the too long didn't listen section. I wanted to extend an invitation to everyone. That's listening to the podcast to come to a hardware meetup. If you haven't heard of this before, this is a community-based event for hardware professionals. So just to give a little bit of a blurb, a hardware meetup and informal project is a global community of over 25,000 hardware professionals that meet in cities around the world to network share insights and find collaborators, investors, and partners. With over 30 chapters and growing and partnerships with recognizable hardware brands like Google X, Tesla, solid works and Onshape hardware, meetup connects professionals, building hardware, businesses with the community and resources.
They need to thrive. Make sure to attend a local and real life hardware, meet up for an invite. Find your city chapter at hardware, meetup.com. I'm very excited to be co-hosting and being involved and the organizational part of this it's really about building a hardware community and making sure that people have the ability to ask each other questions and learn from one another.
All right. Welcome to the too long. Didn't listen segment of our show, where I tried to distill the essence of the discussion that you either didn't have the time to listen to, or just want to go out with some key takeaways. Today we're going to recap the deep dive that we went into with troy Grabow.
And the conversation I had with him regarding intellectual property strategy for hardware startups. So obviously we started with the importance of IP strategy and navigating the patent landscape since it's really crucial for protecting your novel designs and ensuring your startups competitive edge. Remember your IP is often the most insignificant part of your startups value in the early stages, specifically with hardware, since it's really hard to acquire hardware and when securing funding.
So it's really important to have that pretty front in mind and have a culture where engineers and scientists and your team. Are consistently thinking about if something is A specific IP. And if there is what the next steps could be. We also discussed the difference between patents and trade secrets.
And it's really important that deciding between patenting your invention or keeping it a trade secret is very strategic and patents offer public disclosure and protection while trade secrets are valuable, ideas of best kept out of the public domain.
So the right path really depends on your business goals and the nature of the invention. We also dove into trademarks and copyrights and Troy basically said don't overlook the power of trademarks and copyrights. These tools protect your brand identity and original works respectively, which are essential. Distinguishing your product in the market.
And he gave a few examples of big companies that really struggled with this because they didn't do their due diligence. So you should definitely check out those horror stories in the episode when you have when you have the time to listen to the full episode. Obviously really important to manage costs. It usually takes about multi, thousands of dollars to be able to file a patent. And then go through the process of potential rejection and then re submission and filing fees and maintenance fees and all of that stuff.
So we go into the details of that in the episode. And it's really dependent as most things are to what kind of complexity. Troy mentions that. For something that's a pretty. Non-complex straightforward, mechanical components. It could be ranging between 8,000 to $10,000 and then something more complex could be 12,000 to 15,000 depending on what the system is. For the initial cost of filing for a patent.
And then we dove into navigating co-development and supplier relationships.
Troy really talked about the risks of working overseas and what to potentially put in place with clauses to put in place, to make sure that relationship is very secure and that you feel comfortable sharing different parts of your design. When working with the suppliers or engaging in these co-development, it's really important to have clear agreements on IP ownership.
And so that these agreements can prevent from future disputes and ensure that your startup retain control over its inventions. Then he touches upon. Employee IP education. Just making sure that everyone knows what is a trade secret and what is patent and what IP how, like what the clearer. Process of handling IP is during onboarding and departure. And in conclusion. Understanding and implementing a solid IP strategy is a non-negotiable for hardware startups from choosing between patents and trade secrets to managing relationship with suppliers and employees, every decision impacts your startup's future.
And remember, in the world of innovation, your IP is your armor. And it's really important to protect it wisely. And with that, I I appreciate you tuning into the TLDs segment for more insights and detailed discussions. Be sure to listen to the full episode until next time, I really hope that you enjoyed the episode.
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The opinions and information shared on this podcast are for informational purposes only. We always recommend that you seek professional advice before taking any action related to your business or personal ventures.
Thank you for listening, and I hope that you enjoyed the episode