One day, every entrepreneur moves from doing a revolutionary project with Computer-Aided Design (CAD) to looking for a way of making it fundable. Although some methods of achieving so are beyond the control of an individual, there are ways one can improve the odds.
But before you rush into seeking those who will find your innovation worth funding, let’s figure out what buttons to push.
The most important thing that you have is your intellectual property (IP), and this is what you should focus on. First, you need to determine what exactly you own, what components it has, how to protect it, and how to make your business grow on it.
For a potential investor, the way you handle your IP determines the value and risks of your business. And this is what is considered when choosing to fund it or not.
Why is IP so important?
Even if you have developed the most advanced designs, you still need a solution to deter competitors and secure your rights. This means finding a way to prevent others from copying, making, or selling your product. By doing so, you will secure your niche on the market, precluding others from trespassing on your turf.
And even if they do, you may use your IP as an offensive weapon to protect your rights through legal actions.
Securing IP is expensive both in terms of the cost of obtaining legal protection and the effort one has to make to achieve it. But having it is especially important to an investor, as intangible assets are responsible for over 90% of a start-up value.
Also, having your IP properly registered will make it easier to explain to investors why they should fund you. Let’s imagine you have designed a new fuel-efficient engine, and now it is time to introduce it to investors. But investors are usually not the people who want to dive into tons of technical documentation to comprehend why your project is important.
Though if you tell them that you have a patent on technology allowing up to 10% fuel savings, apparently, they will be all yours. And only after they are interested, you may bore them to death with technicalities.
How to protect your IP?
The key to keeping exclusive legal rights on your innovations is to start early and think strategically. Do not rely on crisis management in terms of IP rights.
For example, entrepreneurs may wait until they are on the verge of signing a contract with an investor before they secure the rights. This last-minute approach is especially dangerous to any CAD-related business. Because when rushing, you may forget to properly patent a piece of your design, thus making it vulnerable to copyright infringement.
Another important aspect is identifying the core technologies you have. Sometimes entrepreneurs eat into their resources because of a lack of focus, submitting patent applications for non-crucial designs. In legal terms, planning is a key to solid copyright protection. A hastily built IP foundation has gaps for sophisticated investors and smart competitors to exploit.
Challenges in patenting and how technologies can help
For patents to be truly reliable, they need to be properly made. To do so, you need to invest a lot of money, time, and effort, making sure that everything has been accounted for. And one specifically important dimension here is time.
Patenting law in many countries requires that information about the patented product was not publicly disclosed before submitting the application. This is when smart legal contracts come into play.
We mentioned before that smart legal contracts are based on blockchain and make it much easier to sign and license inventions. The key feature here is that each block of a blockchain contains not only a cryptographic hash of the previous block but also a timestamp. This may help to register all the cycles of a product’s development, providing evidence of the time of creation.
The other important feature of smart legal contracts is that they are becoming globally recognized. This is critical for companies that operate in China, where the means of production are located. Recently, the PRC has recognized smart legal contracts, making it way easier for enterprises to patent their designs there. Thus, registering your patent in China is the most reliable way of protecting your IP if you want to produce anything there.
So blockchain technology can make the patenting process more efficient by cutting down some processes and procedures. This is also important for relations both inside a company and when contacting outsourced manufacturers. For example, smart legal contracts allowing for speeding up the process of signing non-disclosure agreements (NDAs).
A blockchain-enhanced NDA can precisely identify the perimeter of the shared data via a blockchain certificate. The agreement has a direct link between the receiving party and specific knowledge items, which makes it possible to easily trace a leakage.
Turning IP into an investment
The moment you have secured all your IP rights and made sure that there are no gaps for infringement, you may think about making additional profit. Many startup companies create their business model on licensing their brand, technology, or both. Licensing and merchandising your idea will help you yield an additional percent of revenue.
This works both for big and small startups. For example, in 2012, Angry Birds publisher Rovio Entertainment generated about 30% of their revenue thanks to licensing when the franchise was at its peak. The same goes for large companies, such as Disney, Apple, Hasbro, and many others.
The smart contract, a unique feature of blockchain, allows the circulation of royalties to be paid to the owner every time the underlying work is resold.
For example, the CADChain’s development for CAD and CAE will allow for the re-usage of older CAD files, such as blueprints of older 3d printers, providing an easy monetization strategy (licensing). Thus, the design owner will be able to sublicense their CAD intellectual property to multiple parties and track the whole process.
Another important feature is how smart contracts help improve communication with advertising agencies. But they are often powerless when it comes to unfair usage of the concepts they have received for promotion. This can be solved by prior registration of the concept on a blockchain. It will help prevent misuse and, if necessary, claim rights.
Thanks to smart contracts, you can safely transfer the license for your IP and be sure that you are registered as the original owner. This ability to track the entire life cycle of a right makes it possible to smoother IP rights audits and simplify IP transactions.
Closing thoughts
Things can quickly go from wrong to badly wrong when IP rights are not properly secured. It may happen because a sloppy employee has sent your CAD files to where they don’t belong. Or a large corporation may exploit the IP of a small business, as they have a horde of lawyers, while you don’t.
Smart contracts will make it possible to license any design in a very short time. And for innovators and creators, this is an easily accessible opportunity to protect their interests.
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