I just got a provisional patent application drafted by an agent. When trying to license an idea, is it appropriate to divulge your ppa to a potential investor? Is there any risk in doing so or are they looking to see if my ppa will provide adequate protection for the future non provisional?
Intellectual Property Law Attorney
That depends on the PPA. The purpose of aPPA is to key you disclose and try to MARKET the invention. what is unclear to me is how good is your PPA.If it's good then disclosing it is the way to go generally. I am generally opposed to disclosing patent claims, so my PPAs generally have no claims.If your PPA has claims, I would suggest not disclosing them. certainly they see interested in seeing if your PPA will provide adequate protection for the future, specifically whether you are likely to be able to stop them if they don't cut a deal with you and if the prospective patent coverage would stop their competitors. Either it does or it doesn't.Uppity have to confidently say it unquestionably will and confidently disclosing the PPA send the message you are confident in the PPA. anything less signals reputation that is off-putting. Your decision. My clients disclose PPA's. I want the prospective licensee to worry that we will eventually sue them if the try to steal it by infringingand we are confident it will stand up. Your licensee wants that confidence.
I am not your lawyer and you are not my client. Free advice here is without recourse and any reliance thereupon is at your sole risk. This is done without compensation as a free public service. I am licensed in IL, MO, TX and I am a Reg. Pat. Atty. so advice in any other jurisdiction is strictly general advice and should be confirmed with an attorney licensed in that jurisdiction.
Intellectual Property Law Attorney
First, drafted is not the same as filed. Let's hope that your provisional application was filed and acknowledged by the PTO.
Second, assuming the application was filed, then deciding whether to disclose the information in that application is no different than the decision whether to disclose any other information about your potential, money-making invention. If your application succinctly, accurately and persuasively describes your invention then use it to raise money or to entice someone to license the rights to make and use, or make and sell, the invention. If for the former, then the application will be only one part of the entire business plan that you will dislcose. If the latter, then -- unlike my colleague -- I think it's important for you to disclose the entire application, including claims if any. A potential licensee needs to know what you think your invention is in order to diligently investigate whether it has the legal duty to license from you or whether it can simply make and sell the product without your permission.
BTW: Your sentence, "When trying to license an idea, is it appropriate to divulge your ppa to a potential investor?" makes little sense. Ideas are free for everyone and are not licensed -- what is licensed are the rights to inventions [that is, concrete products or services]. Moreover, you've combined two fundamentally different business concepts: Licensing the rights to practice the invention and raising money from investors so you can make and sell the invention.
Using a patent agent was fine for drafting your provisional. You now need, however, an intellectual property attorney to assist you to package the information about your potential, money-making product or service and to present it to those interested in investing or licensing and, then, to negotiate the deal. That attorney should be licensed to practice in your state. Good luck.
The above response is general information ONLY and is not legal advice, does not form an attorney-client relationship, and should NOT be relied upon to take or refrain from taking any action. I am not your attorney. You should seek the advice of competent counsel before taking any action related to your inquiry.
4 lawyers agree
Intellectual Property Law Attorney
When you say you "got" a provisional, I assume this means that you (or your patent agent) filed a provisional application. For most individual inventors and start-ups, the purpose of filing a provisional application is to allow you to market the invention to potential investors or partners without worrying that they will steal your invention or that you will lose your patent rights. If you are trying to market or license your invention, it is entirely appropriate to disclosure your provisional to potential investors (although it is always preferable to do so pursuant to a non-disclosure agreement, if possible). I am not one of those who would withhold a portion of the application from investors---this is usually unproductive because most investors want to see the entire PPA before deciding whether to go forward. Note, however, that this is based on the assumption that the PPA is well drafted by a professional patent agent (or preferably, a patent attorney) with at least enough training and sophistication to draft a PPA that will have a fighting chance of being upheld in court when attacked by a litigator such as me. Most PPA's that are filed without patent attorneys (or at least very experienced patent agents) are not worth the paper they are printed on---and I would not show those to investors simply because serious investors will only need a couple seconds to figure out that they are worthless.
The big problem with disclosure of your PPA is that it could defeat your ability to obtain foreign patent rights. Using non-disclosure agreements to assure that disclosures are non-public can sometimes solve this problem. But most investors who know what they are doing will refuse to sign non-disclosure agreements. Unfortunately, many individual inventors or small start-up companies with limited budgets find that they must sacrifice foreign patent rights in order to make the disclosures necessary to attract investors. This is a fundamental flaw in our patent system, but don't hold your breath until this is fixed. Of course, companies with adequate budgets often start by filing non-provisionals and foreign applications at the same time so that their rights are not defeated by prior public disclosures. You won't be surprised to learn that the system favors big companies.
Patent Infringement Attorney
Short Answer: yes, but...
You have done the right thing by filing a patent application to protect your invention. Now, is there a guarantee that those to whom you will disclose your invention won't use it without your consent? No it does not. What it does mean is that you have options in defending your rights. For e.g., you can send warning letters, and, if needed, take them to court to collect profits or royalty after the patent issues. Good Luck.
Trademark Application Attorney
What has the potential investor asked to see? Have they asked to see your filed provisional?
I'll just add a few items for you to consider as general information:
I had a former client who was paid money by the licensee for an exclusive option period so that the licensee could inspect the patent documents with the security that the inventor would not seek other licensees during the option period. Perhaps something like that could work for you with your potential investor.
I think you will need to wow your potential licensee in at least three areas: manufacturability (can I make it cheap enough to make a profit), marketability (can I sell enough of these things and make a profit), and patentability (are there good or bad odds at getting a patent or patents that protect the marketshare).
Having a tangible version of your idea is always very helpful in talking with a licensee.
If your provisional has claims, I would advise against showing the claims. One reason to avoid showing the claims right away is that if your licensee could attempt to design around your claims. In general, I would advise showing claims only when you know the licensee is serious (this could be through a signed letter of intent, a paid option as mentioned above, etc.)
Again, this is not legal advice and this is general purpose information.