If you speak regularly with an attorney, you’ll start to notice a common response: “It depends.”

This is the answer I received when I sat down with Gary Eastman, Managing Shareholder and Managing Partner at Eastman IP, and asked him if all tech companies should be pursuing patents. Gary responded, “That’s an interesting question, because there is no one answer. It’s really a product and company-based answer.”

Even if the answer isn’t clear, the question is worth asking, because patents can be an essential element for growth. Consider an innovator who created a product with a new, potentially lucrative code. In her pitch to investors, she admits that she hasn’t patented her product but will use their investment to start the patent process. Unfortunately, the investors will likely find her product more susceptible to competition, lowering her company’s credibility. The end result is a lower valuation and potentially lost deal.

Patenting is clearly valuable, but at the same time, not all companies can afford the cost and time required for patenting. How are we as CTOs supposed to gauge when a patent is necessary, especially when we don’t know how successful our products will be? The key, according to Eastman, is being aware of and proactive with IP protection from the beginning of the creative process. This article will explore patents and how CTOs can maximize their protective power.

Patents 101

The U.S. Patent and Trademark office has issued more than ten million patents! For an invention or innovation to be patentable, it must be three things: new, useful, and not obvious—new meaning not done before, useful meaning having a purpose, and not obvious meaning that a person of ordinary skill in the relevant field would not find the change self-evident. Once granted, a patent provides an inventor or innovator an exclusionary property right. To be successful in a patent infringement suit, the plaintiff must show that the defendant has copied each of the elements, that is, how it is new, useful, and not obvious.

As a restrictive right, a patent prevents other people from duplicating the invention or innovation. It does not, however, guarantee that you can create it. This notion is why patents are exclusionary rather than a guaranteed right. Eastman explained exclusionary rights with a classic example: a bucket and a pail.

Inventor A designed and patented a bucket, a cylindrical object with one open end. Inventor B designed and patented a pail, a cylindrical object with one open end and a handle. Each inventor has a distinct, legitimate patent. The patent prevents others from manufacturing the same product. Inventor A can create all the buckets that he wants, but he cannot create a pail.

But what about Inventor B? Well, while Inventor B can preclude others, including Inventor A, from manufacturing a pail, he can’t actually produce the pail without using the bucket design. So, if Inventor B wanted to manufacture his own pail, he’d first need to get a license from Inventor A for the use of the bucket. A patent is an exclusionary right because it prevents others from copying a new, useful, and not obvious invention or innovation, even if you don’t have the right to create it.

Exclusionary rights can be of particular concern in the tech industry. Open-source code is used frequently as building blocks for a new, unique code. Any new, useful, and not obvious code can be patented, but the likely legal risk rests in the obviousness element. There is a line between what is obvious and what is not, but that distinction can get fuzzy, even with an objective standard of review.

Timing Matters

Along with obviousness, timing is a big concern when seeking patent protection. In the United States, patents have a “twenty-year term,” meaning that the exclusionary rights are limited to twenty years from the date of filing. Originally, the United States government positioned its patent protections on the first-to-create model. The inventor who could prove the earliest date of creation was awarded the patent. But in 2013, the U.S. shifted to the first-to-file method. The inventor with the earliest effective filing date is now awarded the patent. For this reason, early filing, particularly for provisional patents, has become increasingly important.

International rules for filing also apply. In the United States, inventors and innovators have one year from the first offer of sale or public disclosure to file for a patent. This is not so internationally. Rules abroad dictate that inventors and innovators lose their right to a patent immediately after the first offer of sale or public disclosure. This dichotomy makes determining the scale of the market critical in the early stages of patenting.

According to Eastman, the general rule is to file provisional patents early. By filing a provisional patent, a creator has a one-year window in which to file a full utility patent. Over the course of that year, as elements of the invention or innovation change, more provisional patents can be filed. By the end of the provision patent’s term, the utility patenty typically becomes an omnibus protection for all prior patents. Multiple provisional patents are also helpful to bolster a company’s portfolio and establish a timeline of development.

One helpful tip, according to Eastman, is to file a provisional patent with a request for non-publication. In this case, the design or proprietary information is not published if and until the utility patent is granted. The non-publication request can help keep valuable information private for several years while the utility patent is granted.

Creating an IP-minded Culture

In order to take advantage of patent protections, tech companies should establish an IP-minded culture. Innovative technology must be identified, monitored, and monetized, and it should not be restricted to upper-level management. Employees at all levels can get involved. CTOs can create routine checks for patent protections, giving engineers and technicians an opportunity to be directly involved in the patenting process.

An IP-minded culture can be formalized and incentivized. This kind of awareness for IP considerations does not happen without an intentional effort by the CTO and other technology leaders. In order to encourage participation, employees that pinpoint patentable technology can be rewarded in stages, like when their patent identifications are properly reported, filed, or granted.

Let’s look at an example of how a patent can be successfully identified and monetized in an IP-minded company.

Step One

An employee, aware of the objectives and incentives for patenting, identifies a novel technology and the specific component elements that are new, useful, and not obvious.

Step Two

The employee fills out an invention/innovation disclosure report. He puts enough time and care into the report so that technical information can be easily digested by non-technical leaders.

Step Three

The employee sends the re