Tennessee patent activity on the rise
Consistent with Nashville's undeniable surge in economic activity, 2014 witnessed a record high in the number of patents issued by the U.S. Patent and Trademark Office ("USPTO") to Tennessee residents. Last year, the USPTO awarded an impressive 1186 patents to Tennesseans, which represents an approximately 10 percent increase over 2013.
The rising tide of innovation in Tennessee is not happenstance. Increased innovation results from deliberate, concerted efforts of local businesses, institutions, policymakers and markets to create an infrastructure for productive and diversified business activities. Our state's vibrant culture and favorable economic climate, including the low cost of living and lack of a state income tax, continue to attract innovative businesses and entrepreneurs.
Business coalitions and governmental entities are increasing efforts to cater to local businesses and entrepreneurs. Nine regional entrepreneurial centers throughout Tennessee provide business accelerator programs that facilitate the launch of start-ups through development of intellectual property assets and identification of sources of capital. These efforts have fashioned cradles of creativity and emerging technology centers throughout the state.
While innovation is on the rise in Tennessee, raising capital continues to be a challenge for local start-ups and innovators. An increase in patents issued to Tennesseans should help. For technology-based enterprises, the exclusive rights offered by patents are critical in obtaining capital investments. Potential investors want to know whether a company, through its proprietary inventions and innovations, promises a sustainable advantage over competitors.
A patent grants exclusive rights to the claimed invention for 20 years. Accordingly, intellectual property assets, particularly in the form of issued patents, signal to potential investors that a company is more likely to have a sustainable competitive advantage that will allow it to succeed in the marketplace. Appropriate use of the patent system is an invaluable tool in mitigating risk for potential investors, and Tennesseans appear to be catching on.
Both mature and start-up technology-based companies, especially those with little or no revenue and few tangible assets, need to continue to be diligent about protecting their inventions and innovations. For those seeking patent protection, the new United States "first-to-file" patent system is less forgiving than the old "first-to-invent" system, and consequently has had a profound effect on how companies develop and expand their patent portfolios. Innovators should avoid making any public disclosure of their inventions before filing patent applications, or they risk losing exclusive rights. A provisional application secures a place in line at the USPTO and preserves rights in the invention as of the filing date.
The cost of engaging intellectual property counsel to advise on intellectual property portfolio development and assist with preparation and filing of provisional patent applications pales in comparison to the cost of losing exclusivity, competitive advantage and potential investors.
The importance of innovation to continued economic stability and growth in Tennessee cannot be understated. If state and local efforts to foster innovation continue and innovators are evermore diligent to protect their inventions, Tennessee should continue to see increases in the numbers of patents issued to its resident innovators and in time increases in capital financing and investments in local innovation.
Greg Parker and Alison Grippo are Nashville-based attorneys at Bass, Berry & Sims PLC. Both practice in the firm's Intellectual Property Litigation Practice Group, of which Parker currently serves as the co-assistant practice leader. Parker can be reached at gparker@bassberry.com or 615-742-7788. Grippo can be reached at agrippo@bassberry.com or 615-742-7836.
