Tag Archives: technology companies

Patent

Failing To File Patent For New Technology Could Cost Company More Than Money

It is arguably one of the most exciting moments for a technology entrepreneur — seeing that invention for the first time. Whether it’s a new software program, mechanical device or a breakthrough biotech discovery, the feeling is always the same, pure elation. If you’re a technology entrepreneur you know the feeling. You spend months, possibly years, working toward this moment. Now that you’re here, you’re ready to turn this exciting innovation into a business. But before you take that costly leap of putting together a company and going to market, consider one very important step that can save you, and your company, everything you’ve worked for — the elusive patent.

Who needs it?
Many technology companies and entrepreneurs initially think they don’t need, or just can’t afford, patent protection at the very initial stages of their business development. “No one else could develop this right now in the exact same way we have,” or “It’s already protected by trade secret laws,” or “It’s going to cost a lot of money right now, so we’ll wait until the product is making us a profit.” The truth is, not filing a patent to protect your proprietary technology could cost a great, great deal more in the end, and might even make your company less attractive to investors and business partners.

What kind of companies should file for patent protection?
Companies in a wide variety of technology fields increasingly rely on patents as a key tool to protect their technology. For example, companies in the high-tech industry (software, semiconductors, etc.), the low-tech industry (consumer gadgets, etc.) and the life sciences/biotechnology industry (pharmaceuticals, medical devices, etc.) are spending more and more money on research and development and, thus, are increasingly looking to patents as a mechanism for protecting this expensive investment.

If you’re a typical technology startup, you will likely need to find early-stage, mid-stage and, eventually, late-stage investors for capital to continue to fund your research and development, and pay the tremendous costs associated with commercializing your products and services. Every kind of investor, from angels to venture capitalists, will scrutinize the adequacy and strength of a company’s intellectual property assets as a part of the investor’s decision to invest in that company. More than ever, investors are expecting a company to have either filed for patent protection or already have some patents. Another significant ramification of failing to obtain adequate patent protection is that investors may place a significantly lower valuation on your company. Thus, taking steps to file for patents, and then eventually obtaining patents, is often a critical and significant step in proving credibility to any kind of investor.

Another major benefit of patent protection is using your patents as a legal mechanism to protect your company’s most critical proprietary technology from infringement by competitors and others. Competition is fierce in the technology and biotech/life sciences industries and your competition may knowingly, or inadvertently, use your technology to gain market share. Your patent is often the most valuable tool to combat these serious situations and could be a key factor that differentiates your company from your competition.

How patents pave the way to new markets?
Many technology companies, particularly startups, are not in a position to commercialize their technology in every country in the world and in every “field of use.” A solution to this problem is to find business partners who can be given a license to use these technologies in other markets, both here in the U.S., and globally. Taking steps to file for patent protection can increase your company’s ability to find proper licensees who will scrutinize the technology and opportunity as much as any investor. Patent protection can also increase your negotiating leverage when entering into contracts with licensees and could have a significant impact on the level of royalties and other compensation that licensees agree to pay you for the use of your technology. Indeed, potential licensees who still want rights to your technology very often negotiate significantly lower royalty payments if you have failed to obtain proper patent protection because the licensee deems your technology to simply be unprotected “trade secrets.” As a bottom line, taking steps to obtain proper patent protection can potentially increase the revenue stream to your company from others who want to use your technology.

Wooing businesses to AZ in the recession

Despite Tough Times, Economic Development Groups Continue To Woo New Businesses To Arizona

Economic development experts in Arizona hope to parlay the state’s convenient geographic location, and even a stagnant housing market, into attracting new businesses.

Toss in relatively low taxes, a freeze on new regulations and a well-honed reputation as a business-friendly state, and recruiters have a tool box full of reasons why businesses should consider relocating to Arizona.

But that’s not all the economic development agencies tout. Local experts know that businesses looking to relocate are interested in those intangible quality-of-life issues: an available and educated work force, a higher-education community that excels in research and churns out highly qualified workers, and a relatively low cost for starting up and doing business.

Television commercials are generally cost-prohibitive, officials say, leading them to rely heavily on the Internet for their recruitment efforts. Feature articles in national trade publications also represent a low-cost way of spreading the Arizona story.

Two of Arizona’s largest economic development agencies — the Greater Phoenix Economic Council (GPEC) and Tucson Regional Economic Opportunities (TREO) — are collaborating on a campaign to lure California businesses to Arizona.

Scarlett Spring, GPEC’s senior vice president of business development, says her team makes targeted trips to California at least once a month, with specific emphasis on the Bay Area, Los Angeles and San Diego. Often, GPEC invites local mayors along to give recruitment efforts an official flavor. Bringing mayors, Spring says, gives recruiters leverage and “opens doors that might not otherwise be open.”

The GPEC message to California?

“Arizona has a business-friendly environment and a reputation of having lowered taxes in some shape or form for 10 consecutive years,” Spring says. “It’s a lower-cost environment for their employees, whether through workers’ comp, competitive wages or health care insurance. Those are the operational costs that a company looks at when considering a financial move or expansion.”

Noting that virtually every phase of running a business is more expensive in California, Spring adds, “What we’re doing is trying to position Arizona as being complementary to the California marketplace.”

DGPEC also invites businesses to Arizona for special events. For example, last November biotech and solar companies from the Bay Area were hosted for a weekend in the Valley. The visit included attending a game between the Arizona Cardinals and the San Francisco 49ers. Two of those companies are close to moving to Arizona, Spring says.

Laura Shaw, senior vice president of marketing for TREO, agrees with the strategy of taking advantage of Arizona’s location. California businesses struggling under mounting operating costs have the ability to move to Arizona and still access California markets.

TREO targets such industries as aerospace, defense, biosciences and alternative energy, and only meets with companies that have been pre-qualified as likely candidates for relocation.

“Research shows that labor drives all market decisions — whether a company can find the labor that fills their needs,” Shaw says. “We focus on matching our assets with a company’s needs.”

Despite the national perception that Tucson is a low-wage community, TREO presses for higher-paying jobs.

What the Tucson area offers is a high-growth Southwestern region situated at the doorstep of California and Mexico, with young talent graduating from the University of Arizona. Tucson is also in the heart of one of the most heavily traveled trucking networks, linking Mexican markets to the California coast.

Meanwhile, the Arizona Department of Commerce, though on a limited basis because of budget cuts, continues to participate in trade shows and foreign direct investment events in Canada, Mexico and Europe. Commerce officials and hired contractors work with foreign companies that are interested in expanding to Arizona. They also help match Arizona firms with foreign customers.

Kent Ennis, interim director of the Commerce Department, confirms that a tight budget makes recruiting more difficult, yet the agency reaches out to major industries, including bioscience and solar. In fact, the Commerce Department led an Arizona delegation to a national convention of bioscience technology companies in Atlanta on May 18.

In addition, the Commerce Department assisted in the relocation of Spain’s Albiasa Solar, which in April announced plans to build a $1 billion renewable solar energy plant near Kingman. The project will create 2,000 construction jobs and more than 100 permanent positions when it is completed in 2013, Ennis says.

The Arizona Association of Economic Development, which is more of a trade organization representing Arizona firms and does not embark on recruiting efforts, nevertheless gets its share of contacts from businesses considering a move to Arizona, says Bruce Coomer, executive director of AAED. But first, he makes sure to sing Arizona’s praises. He mentions the usual advantages, but adds an unlikely twist.

Because our housing market crashed,” he says, “that’s a plus. Now there is affordable housing if a company wants to move here, especially from California. Their employees can really get some bargains.”