Avoiding Patent Pitfalls in Crowdfunding
Crowdfunding platforms (like Kickstarter, Indiegogo, and others) provide innovators an opportunity to secure financial backing for their products via an online community. These campaigns come with some risks, one of which is receiving unsolicited proposals to improve the product from backers—or the public at large.
The best protection for your new product begins with filing a patent application, before launching your crowdfunding campaign. But after that, the work isn’t done. You should anticipate the possibility of receiving unsolicited proposals from third parties, and have a plan to respond.
Taking the wrong action can risk your exclusive rights in the product, potentially undoing your hard work.
Crowdfunding Campaigns Are Visibility Campaigns
The most successful crowdfunding efforts have outstanding visibility in addition to a great product. To secure funding, innovators provide significant details about their product—not just through the campaign website, but also via social media, press coverage, ads, online forums, and so on. This level of publicity helps show that the product is ready for market and that the innovator is committed to success, which encourages backers to contribute.
But this visibility comes before a commercial version of the product is available. In fact, visibility often comes before the product has been first manufactured (and tested, changed, retested, refined, and finalized). Innovators end up disclosing significant information and engaging in extensive public discussion—which can invite unsolicited proposals for how to “improve” the product (e.g., adding features, changing structure, enhancing functionality, etc.).
It can be tempting to incorporate the good proposals into the product, but proceed with caution.
Why These Proposals Can Lead to Problems
Under U.S. law, a person is considered an inventor if they contribute to the conception of subject matter contained in at least one claim of a patent. (See Note, below). More importantly, absent an agreement to the contrary, every inventor owns the patent—and ownership includes the right to use, sell, or license the patent independent of other inventors.
So, proposals from third parties must be approached carefully. Even if a patent application was filed before launching a campaign, it’s common—and often necessary—to file additional applications covering improvements made during product development.
But if one of those additional applications claims a feature that was someone else’s idea, inventorship could be challenged. A successful challenge can mean a loss of exclusive rights in the product, and even an unsuccessful challenge can require a significant amount of time and expense to defend.
Inventorship confers ownership. Protect what’s yours.
Strategies to Limit Risk
Before launching a crowdfunding campaign, innovators should consult with a patent practitioner and develop a strategy to limit risk from third-party proposals. Relying solely on an existing patent application isn’t enough. A good strategy for handling proposed improvements should include some or all of the following:
Be appreciative but non-committal. Respond to proposals with something like, “Thanks for your interest in this product and campaign. I’m already anticipating improvements for future product versions.” That keeps things polite and forward-looking without acknowledging that the idea is new or valuable. Avoid “Great idea! I never thought of that,” or other admissions.
Document every proposal. Save emails or message threads that include proposals. If the proposed idea is expressed in conversation, write down the details soon after, including the date. Keep any sketches or drawings that might have been shared by the third party. Be specific and timely in your documentation.
Control what you can. If you’re sending prototypes or betas to select backers, require an agreement in advance that any proposed ideas for improvement become your property and will be assigned accordingly. This may require offering something of value—money, equity (if allowed by the platform), or something else—in exchange for the assignment.
Loop in patent counsel. Your attorney can assess whether the idea—or something very close—is already covered in the application. If it is, you can be more confident that you alone would be considered the inventor, even in the face of a challenge.
What If the Proposed Idea Isn’t in the Application?
Don’t despair, there are still options. A patent attorney can walk you through them, but here are a few basic possibilities:
Do nothing. If the idea isn’t useful or wouldn’t qualify as inventive, there’s no need to act.
Check your earlier product development materials. If the idea appears in your earlier notes, sketches, or drafts—but didn’t make it into the original application—you may be able to file a follow-on application and rely on your documented work as proof of prior invention. Preserve this supporting evidence carefully.
Disclose but don’t claim (yet). You could file an additional application that includes the new idea in the description but doesn’t claim it. Then, approach the third party for an assignment. If they agree, great—you can add claims to the idea later. If they don’t, your disclosure may prevent anyone else (including the third party) from obtaining a patent on that idea.
Get Assignments Early
If the proposed idea truly wasn’t yours—but becomes important to your product’s success—you may need to secure an assignment from the person who suggested it. Just know that the longer you wait (and the more successful the product becomes), the more that assignment is likely to cost you, so get it early.
Get the assignment before the product really takes off.
Action Step
Filing a patent application is just the beginning. Before launching a crowdfunding campaign, talk to a patent attorney about the broader risks. If they say your patent filing alone offers all the protection you need—without asking how you plan to promote the product—you may want to find counsel with a more strategic, forward-looking mindset.
Note: There are exceptions to this rule, of course. A person would not be considered an inventor if they contributed an “obvious” improvement, exercised mere “ordinary skill” in reducing an idea to practice, worked at the direction of another, or discovered a problem without contributing to a non-obvious solution.
