This is an extract from our Galactic Guide to Space Entrepreneurship
An understanding of intellectual property law and its potential protections is vital for any startup. For many space startups working in the technology sector, technology IP is the primary asset upon which entrepreneurs are able to raise capital. IP is also a powerful tool when building credibility with customers and business partners. An IP protection strategy should be implemented early in the development of a space company.
The World Intellectual Property Organization (WIPO) defines IP as “creations of the mind, such as inventions; literary and artistic works; designs; and symbols, names and images used in commerce”. There are four main types of IP relevant to the space domain: patents, trademarks, copyrights, and trade secrets. Patents give an inventor exclusive rights to manufacture, use, and sale of inventions. The University College Dublin explains that to be patented, inventions must relate to an eligible subject, be new with respect to any other patented technology, be nonobvious, and should have a demonstrated practical application for the market. According to the WIPO, Trademark is a “distinctive sign that identifies certain goods or services produced or provided by an individual or a company”. They are incredibly important to brands, as some view their trademarks as the most valuable part of their business. Copyrights are exclusive rights to copy and use original, creative works in media. For startups, common examples of copyrightable materials include logos, software and web pages. Trade secrets include can include any type of information.
For patents and copyrights on software having established IP can show a product’s quality. It can even serve as a form of collateral for venture capitalists and banks. If companies lack formal IP, they may be considered less valuable than IP-holding competitors potentially missing funding opportunities or acquisitions. Smart entrepreneurs should also remember that legitimate trademarks, copyrights, and patents have the potential to acquire exponential value over time and should be protected. It is essential to establish how every piece of IP is owned and protected inside a startup.
STRATEGIES FOR IP PROTECTION
- Trademark Protection
Entrepreneurs should determine what main components identify their brands and obtain legal protection through trademark registration. After the registration process, companies should use their trademarks in a legal manner while monitoring the market for possible trademark infringement.
- Patent Protection
Startups need to establish whether it makes sense to protect their technology through the acquisition of patents, trade secrets or voluntary disclosure. But entrepreneurs need to pay attention: by patenting a product, they have to make the invention public and thus have to consider how easy it is to create a copy of said product. Also, an astropreneur should consider in which countries they want to file for patent protection, seeing as the patent process can become expensive very quickly.
- Copyrights Protection
Key documents, including electronic data, and software may be carefully protected through copyright. On the one hand, companies may declare the right by copyrights registration. Additionally, they should monitor the behavior of copyright infringement, to protect their competitiveness.
- Trade Secrets Protection
Trade secret protection involves keeping a technology or idea secret. Many companies accomplish this by limiting access to a few key employees and enforcing non-disclosure agreements (NDAs) with investors, prospective clients, suppliers, and employees. Startups often opt for this method of IP protection because it is typically cheaper and more efficient than pursuing a patent, especially if the technology in question cannot be easily identified from the reverse-engineering of a product that competitors can acquire.
- Voluntary Disclosure
Voluntary disclosure is the act of publishing one’s IP information through papers or articles so that no one else may claim to be the first inventor. This invention is therefore not patentable, but it can help spread a technology or even create a new market. When opting for voluntary disclosure, an entrepreneur should choose an official channel which enables them to enforce the publication date and the ownership of the idea in case of legal disputes.
- Composite Protection
Composite protection is a mix of the methods mentioned.
OBTAINING EXTERNAL IP
Obtaining External IP Rather than performing R&D in-house, companies can license-in to use IP developed by third-parties as a basis around which to build a startup company. The advantages of licensing-in include reducing the cost of R&D, gaining a patent portfolio, as well as building relationships with inventors. If a startup wants to use a licensed product, it is important to create a relationship with the IP owner. The disadvantages of adopting this approach include the typically high cost of obtaining access to external patents that usually include fixed upfront costs and royalties depending on the number of products sold (Belingheri and Leone, 2015). Organizations providing patents to startups currently include:
- Universities, through their Technology Transfer Offices such as the Technology Transfer Office at the John Mica Engineering and Aerospace Innovations Complex at Embry-Riddle Research
- Space agencies often have technology dissemination as part of their mandate and may have benefits for startup companies such as lower or postponed licensing fees, funding, or incubation. See here our article on the NASA Technology Transfer Program, and here our interview with one of the ESA Business Incubation Centers
- Research Institutes, for example the Technology and Engineering Center for Space Utilization from the Chinese Academy of Sciences, transfer their technology to spin-off companies.
- Private companies are more difficult to find and may need to rely on technology brokers to commercialize their technologies. For example, the Aerospace Corporation advertises its technology solutions to external companies with the intent to license out their IP.
SELLING OR LICENSING-OUT INTERNAL IP
IP can also become a way to make profit. For example, a company can sell the rights to non-competing firms operating in different markets or to other companies with complementary assets that could add value to the technology. Licensing out can become a strategy to open new markets or create an industry standard, which could be done either with formally patented technology or by offering services around specific know-how developed by the startup.
For example, the German startup PT Scientists, who joined the Google Lunar X-Prize, licensed out some patented technologies early on to obtain additional funding to compete in the prize. They now offer engineering consulting services thanks to their reputation as innovators in the market.