Business Esentials: 'When imitation is the sincerest form of exploiting our inventions'

A technology firm fears that in applying for patents, it will be giving away its secrets, and profits, to rivals

ScanSafe is a small but rapidly growing firm that specialises in guarding companies against computer viruses, spyware and other internet threats. Founded by two brothers in 2000, it has now reached the point where patents are becoming an issue.

"When you file them, you show your secrets to the rest of the competition and then they can use them to their advantage. Yet if you don't file them, you are vulnerable. How do you manage it?" That's the question posed by chief executive Eldar Tuvey, who runs the firm from a London office while his brother minds the US side from San Francisco.

The rate of innovation at ScanSafe is accelerating as the company grows and recruits more leading research engineers, he explains. Some of these discoveries are technical, some pure business methods and most are somewhere in between.

"We have applied for a number of patents because of this, some of which are coming up to their 18-month milestone where we need to publish or retract."

When a company makes an international patent application, a search is initiated that culminates in a report being issued 18 months later.

Once the firm has received this, it must decide whether it is happy for the report to be published, or whether it wants to withdraw the application, given that it will be at least two months before the patent is granted.

"Our quandary is that if we go ahead and publish, we show our competitors how we do things and perhaps they can use some of those ideas to inform their own R&D efforts. Potentially, we may then have to rely on expensive legal battles in order to retain full commercial control of our intellectual property and exploit the competitive advantage that depends on it."

But if ScanSafe does not publish, Mr Tuvey fears it won't have proper protection by relying on confidentiality and copyright alone. "A major concern is the cost implications if our competitors try to recreate ScanSafe's ideas from scratch," he adds. "As a result, what we do is apply for patents, but then consider the issues before publication on a case-by-case basis.

"What we'd like to know is whether we are getting it right. Perhaps there is something we have missed or maybe there is a way we could be dealing with this issue better."

He provides an example of a mathematical model that is very effective at scanning and analy- sing data on the web. "This gives us benefits in terms of higher speed, lower costs and better service to customers. But publishing this concept as a patent makes it capable of replication by a skilled practitioner and it could potentially be used in all sorts of high-speed scanning.

"On top of this, some of the ideas involved could give valuable hints to our rivals and allow them to shortcut the development of a competing, but not necessarily infringing, solution."

Thanks to ScanSafe's innovations, it currently scans three billion web requests a month for customers such as National Express, Paul Smith, NM Rothschild and Eurostar. But if it is to continue growing, it has to solve its patent dilemma.

www.scansafe.com

WHAT THE EXPERTS SAY

Simon Davies, European Patent Attorney, D Young & Co

"Mr Tuvey is right to avoid relying on confidentiality. As ScanSafe grows, its ideas will increasingly be disseminated through staff switching jobs and product analysis by competitors. The downside of patent publication at 18 months is therefore probably less pronounced than Mr Tuvey fears, especially as few companies enjoy a full 18-month technology lead over rivals.

"Most companies restrict their patent filings for cost reasons rather than worries about publication. For example, if an invention is buried deep in product internals, infringement may be hard to detect, so a filing may not make financial sense.

"ScanSafe should therefore continue with the applications for core innovations, while using confidentiality to protect ancillary expertise."

Miles Rees, Business Development Manager, The Patent Office

"Choosing confidentiality to protect your innovations involves risk. This strategy relies on the discoveries remaining secret and the premise that competitors are not working on a similar idea which they could then patent.

"A patent gives you the right to stop others from using your invention and would empower you to take legal action.

"The current law in the UK states that only computer-implemented innovations which are novel, inventive and make a 'technical contribution' can be patented; the US approach is more wide ranging.

"Copyright protection in the UK exists automatically in any source code, object code or documentation you produce. But this covers only the text or string of characters, not the technical objective, principles or ideas embodied in the code. The burden is on you in infringement cases to show your material was copied."

Andrew Alton, Head of Software at Patents Group Urquhart-Dykes & Lord

"You should be focusing more on the risks posed to your US business by rivals' patents, rather than inadvertently helping rivals. Software and internet technologies are heavily patented in the US; acquiring your own rights manages the infringement risk.

"Also, first-mover advantage can be more important than the disclosure of your innovations. For example, the 'secrets' of Google are public but also protected.

"Given your significant American activities, the real question is, why not file applications in the US? Software, business methods and algorithms are more capable of being patented there than they are in the UK or continental Europe. File there only and your innovation will then be disclosed only if a patent is granted.

"If you're in a gun fight, then go armed."