Unlocking Financing Opportunities with IP: How to Patent an Idea — The Journey of Susan Blanchet
Intellectual property is a powerful asset for your company. It doesn't just keep your competitors from using your ideas — it also unlocks financing opportunities for your company. However, not everyone knows how to patent an idea, and the process can be intricate and expensive. Educating yourself about IP will help your company capitalize on innovation and ace your next grant application.
In this episode, Susan Blanchet discusses her experiences with IP rights for her company, Origen Air. Having had first-hand experience in the right and wrong strategies for IP, Susan shares best practices that you can use to maximize your IP resources. You'll learn about how to patent an idea and structure your IP to get the full benefits of your inventions.
Listen to the full episode to know how to patent an idea to secure financing for your business!
Here are three reasons why you should listen to the full episode:
Gain a concrete idea of how to patent an idea.
Learn how you can segment your IP.
Understand the role of patent agents, strategists, and industry advisors in formulating your IP strategy.
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[05:38] Susan's Journey into IP
Susan has degrees in environmental studies, psychology, and law.
Fourteen years into her career, she wanted to do something that would allow her to give back.
She then met her co-founder, who was trying to secure the IP rights for his genetically enhanced plants. As a lawyer, she stepped in on the negotiations.
[06:41] Early Experiences in IP
Susan quickly realized the importance of having IP rights for their company. However, at the time, universities only liked to give out IP to consortiums.
So, they decided to share the IP rights with another company for the first year.
Susan quickly realized that sharing IP rights weakened their position. Investors prefer companies that have full control over their IP.
“Investors like sure things, and they want you to have full control.”
Their company also experienced many grant denials, as they required in-house IP made in Canada.
[07:51] How to Patent an Idea
“The more I started looking into it, it became clear that IP was more of an art than a science.”
A patent is granted if an idea exhibits inventiveness, novelty, and uniqueness.
However, your ideas don't have to be rocket science to be patentable.
Susan was able to patent a UVC chamber that kills viruses suspended in the air. They did so by making changes to the lighting and baffle systems.
Working with a patent agent and doing thorough research on registries are ways to confirm if your idea is novel.
[09:59] Strategic Segmentation for Patents
The UVC chamber is part of a larger system that cleans the air inside a building.
The complete system has many components, including aeroponic plants, a UVC chamber, and a sensor system.
Segmenting your product into multiple patents can help you pitch different items to different stakeholders.
Possessing a relevant IP can help with company acquisition. Relevant IP helps even if you can't meet the original required sales figures or other criteria.
Before hiring a patent agent, talk to an IP-focused and industry technical advisor. They can help you get a better idea of how to patent ideas for your strategy.
[13:35] Working with International IPs
A patent agent can help you navigate the complexities of international IPs.
Each country has different IP systems and unique requirements on how to patent an idea.
The PCT is a patent agreement across 200 nations that gives you 30 months to decide where to register your IP.
Quick and decisive action can increase the success of your IP, especially when you have competitors who have the same idea as yours.
[15:18] The Role of Patent Agents
Contrary to what most people expect, patent agents are often not lawyers.
Many patent agents have an engineering background. It's critical to choose one that aligns with what you're trying to patent.
They can explain the nuances of what makes your invention novel to the patent investigator.
“Our patent application, it's like a scientific report. It has to be somebody with a background in the area you're filing.”
Alongside a strategist, they can help you with strategic planning.
Finally, they can protect you from mistakes that might cost you your IP rights.
[20:43] Multidisciplinary Approaches to IP
Susan finds it surprising that there aren't many IP courses for engineers. It seems that people think of IP studies as being only for legal professionals.
There needs to be better collaboration between engineering and legal teams for IP.
Finance teams also need IP expertise so that they can contribute to strategic decisions on IP.
Applying for patents in multiple countries can drain the financial resources of your company. Therefore, be swift and decisive.
“You have to choose, and some of those choices might be wrong. But you have to weigh all of the different potential yeses and noes.”
[24:04] The Benefits of an IP Strategy
Having the correct IP rights can help you attract investors as you raise capital and apply for grants.
You can work with like-minded founders in collectives to use their IP without charge.
Potential stakeholders might not ask explicitly about your IP. However, you can be sure that IP will always be part of their due diligence.
Tune in to the full episode to hear about Susan’s rejection from a funder due to lack of IP.
[26:24] Susan's Financing Advice
Working with someone experienced in finance is critical for navigating the IP process.
Make sure to have a CPA or someone with formal training on financial statements and performance.
Use gatekeeper questions to know if someone is suitable for your company's needs.
Don’t hesitate to move on from someone who can’t help you in your current situation.
“If they're not interested, get rid of them fast. There's no point stringing along someone that you're never going to have a deal with and wasting your time."
“It doesn't have to be like rocket science. The novelty, the utility, and the element of inventiveness is all you need.”
“We don't need a super strong argument. You just need something that's different and unique and just a little bit different than what's been done before.”
“It's too much for a CEO to figure out on their own. So that's why the patent agent is key.”
“Before you publish anything on something you want to file a patent on, talk to a patent agent or an IP lawyer.”
“People think of IP as a legal area. I think of it, it's as much engineering as legal.”
Susan Blanchet is the co-founder of Origen Air. Their enterprise is dedicated to bringing nature indoors while providing health, wellness, sustainability, safety, and savings. Under her leadership, the company grew to 18 employees and $1,000,000 in funding in two years.
Susan was also a senior litigation counsel for the Ministry of Attorney General, British Columbia. To further pursue her environmental advocacy, she joined the reality TV series The Social Movement as a producer and participant.
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To fuelling the life you want to live,
Susan Blanchet: It's almost like Lego, of how you can fit together all of your patents to create a portfolio that will be useful not only to when you're looking for investment, but one of the best things that I was told was, "Think about how and who you want to exit to." If you plan on selling your company in the future, what IP might they be interested in purchasing that will increase the valuation of your company?
Christina Sjahli: Intellectual property allows founders to have a firm hold of their business ideas and trade secrets. You may not realize it, but this intellectual properties are asset to you. They help keep you competitive and innovative in an ever-changing market. That's why it's essential to protect this asset with an IP strategy. That's the reason why we curate this Intellectual Property Podcast Series. We want you, as the founder, to understand that your IP matters. So it's important to know what are your intellectual assets, how to protect them, and how can you leverage this asset for your business growth.
Today's episode is the third episode of the Intellectual Property Podcast Series. Our guest is Susan Blanchett, co-founder and CEO of Origen Air, a health tech startup located in Victoria, British Columbia, Canada. Susan is a founder, just like many of you. And she is in the trenches in creating Origen Air's IP strategy. Susan shares, among others, the following insight: a misconception she had 12 months ago and how it created challenges in moving her company forward; why you as a founder should think differently about IP; why it's important to involve your engineers and finance expert in this IP process; what are the key resources to use in getting her IP ready for grants and investors; how her exit strategy shapes the overall IP strategy.
If you're listening to this episode, and you're thinking, I'm not located in Canada, so why should I listen to this episode? If you are not located in Canada, don't jump to this conclusion that the episode is not relevant to you. Take the time to listen until the end because it will provide you tips where you can use it in your research within your own country of operation and for you to ask the right questions.
You're listening to Her CEO Journey, the business finance podcast for mission-driven women entrepreneurs. I'm your host, Christina Sjahli. If you are new here, a big, warm welcome. If we are not connected on LinkedIn, please reach out and say hi, because that's where I hang out and share my business finance tips. If you have been listening to this podcast for a while, and you are a regular listener, I want you to know I appreciate you. My podcast won't be around without your support. This is a free weekly show where my guests and I want to inspire you to balance between mission and profit, to create an impact in this world, and to achieve financial equality through your business for good.
If you haven't listened to the last two episodes in this podcast series, Episode 128 and 129, there is one key point that every single guest made, including Susan, in today's episode. It is about your exit strategy and how it impacts the overall IP strategy. This is when normally a founder realize how important it is to have a forward-looking view. The same is true with financial results. As you are shifting from short-term to long-term, the value of historical information decreases. We cannot change the past. We can learn from the past, learn from what had happened, and done and use those pieces of information to build the future. That's what financial forecasting is all about.
If you are at a stage where you realize you need to build a more robust financial forecasts, but don't know where to start, we have a solution to your problem. Download the Forecasting Guide we have created for you and start creating a better and improved financial forecasts. You can find the link to this guide in the show notes. And let's say after using the guide you think: "This guide helped, but I think it's better if I focus my time on doing what I really love, which is building and growing my business. I know business finance is important, but I don't love it." That's when we are here with you. We understand building a proper and robust financial forecast takes time, takes accountability, curiosity, and passion for your business. Connect with us at christinasjahli.com/lets-chat. Now, let's find out Susan's CEO Journey.
Susan Blanchett. Welcome to Her CEO Journey, it is a pleasure to have you here today.
Susan Blanchet: Thank you for having me.
Christina Sjahli: We're gonna be talking about intellectual property and business finances. But before we dive into all that detail, let's start with your journey from a lawyer, and then now you are the co-founder and CEO of Origen Air.
Susan Blanchet: Yes, it's an interesting journey. I have a degree in environmental studies and psychology in addition to my law degree. After 14 years with the province and getting an incredible education as a lawyer, I just wanted to do something that I was giving back. I found, I wasn't having the passion that I desired. At that time, I met my co-founder who had a couple of businesses in Hawaii for 10 years. Then he had started a green living well company. When I met him, he had just realized that regular plants did not clean the air. And he had found genetically enhanced plants from the University of Washington, but he didn't know how to negotiate for the IP rights to these plants. That's where I stepped in as a lawyer. That's how it began.
Christina Sjahli: So that's mean that from the very beginning, you already thought about this product will need an IP strategy.
Susan Blanchet: Yes, I knew that having an IP to ourselves would be the most important. At that time, universities only like to give out intellectual property to consortium. So we actually shared the intellectual property with one other Canadian company for the first year. I realized very quickly how that weakened our position. Investors like sure things, and they want you to have full control.
Christina Sjahli: So realizing this early on, and then you took the first step, what is the next step to really protect it? If you can share that with my audience, because majority of my audience may not know how they can apply or what they need to think about patents.
Susan Blanchet: As we moved along, I started getting a lot of denials from grants that I applied for, telling me that I needed in-house intellectual property that was made in Canada. The more I started looking into it, it became clear that IP was more of an art than a science. We finally, just this year filed our first in-house patent in June. If you had asked me a year ago, if I thought what we filed on was patentable, I would have said no, because it didn't seem like it fit the criteria of inventiveness and novelty and uniqueness that is required to get IP.
There's many ways to file patents on something that is just a bit of a change or a new difference to the IP. The way my patent agent explained it to me is, "As long as you can show that you've made a change that is novel and different. It doesn't have to be like rocket science. The novelty, the utility, and the element of inventiveness is all you need." So our first in-house patent, just to show you how it isn't rocket science, is it's on a UV chamber. So it's UVC light. We use a unique baffle system that makes air flow change speed to slow down in front of the lights that actually can kill, or as my scientists would say, denature viruses such as coronavirus.
The novelty was using just a new form of light and the baffle system that changes the air flow. We don't need a super strong argument. You just need something that's different and unique and just a little bit different than what's been done before. To help others and the listeners, one of the big things is just trying to figure out how to search the registry, looking it up online taking a review of what is in there, and seeing if your idea is novel or different, and just taking a leap, hire a patent agent.
Christina Sjahli: So the first one you say research. Second one, you said hire a patent agents. Is there any third step, fourth step?
Susan Blanchet: So I guess just to backup a bit, I should explain what our invention overall is. The genetically enhanced plants that we have the license to distribute globally, exclusive license, when we obtained those, we took them and put them into a refrigerator-sized, commercial air purifier. So the air comes in through the plants. So we have a natural biofilter, and that biofilter's aeroponically controlled, and it's autonomous. So it's software controlled with all of the sensor technology that we've inputted into it coming back to our cloud-connected, we have an app, it tells people what the air is in the building, how the air is being cleaned as it comes in, as as it leaves. Once it goes through the biofilter and all these sensors, it goes through this chamber I was just talking about where any viruses, bacteria are denatured before the air is put back into a room. And the central technology tells our clients and us of exactly how the air is being cleaned.
So at first, we might think you can only patent the unit as a whole. But as we started to educate ourselves, we realized, there's a, it's almost like Lego of how you can fit together all of your patents to create a portfolio that will be useful not only to when you're looking for investment, but one of the best things that I was told was, "Think about how and who you want to exit to." If you plan on selling your company in the future, what IP might they be interested in purchasing that will increase the valuation of your company?
So for instance, in our area, we are developing the Sentinel, which is a freestanding commercial air purifier. But our big goal is to develop an HVAC-integrated air purifier that will connect to the AHU and circulate all of the air in a building. So for our exit, we would be looking to HVAC, large HVAC companies. What type of IP would they want? Because a large HVAC company is not going to purchase or acquire a company unless it's doing 50 million in sales. For us to jump to 50 million in sales, it's going to take a long time. But with the correct IP that they want to acquire, they might acquire our company when it's at 10 million in sales if it has IP that it can add to its portfolio. So for instance, with our sensor technology and how it connects with the building management system, that's a piece of IP we want to think about.
So back to the list of what I would do, the steps I would take is maybe before hiring a patent agent, talk to your industry technical advisor, try to speak to an IP-focused advisor. Then one other step, our company is still pre-commercial. We're just starting sales at this point. We've only raised a pre-seed round. We've opened a seed round now. So before you have 75,000 in sales, you can also apply for Canada Export. So Export Canada will fund patents overseas. So if you're planning on going global, or even to the United States, this is a very important step. Because patents are very expensive.
Christina Sjahli: Yeah. That is what I gonna ask you. How did you finance this?
Susan Blanchet: Our first patent we applied for in June was covered by a grant from the Innovation Asset Collective. We've applied for, and not received yet but are hopeful, with the Export Canada for funding to cover some of our overseas grants. There is the PCT. It's a patent agreement across 200 nations. Under the PCT you have 30 months to decide where you want to register. It's kind of a placeholder. So that if someone else has developed the same thing, as long as you register before them, yours is held. Then you have 30 months to decide: Am I going to register in the United States, in Canada, overseas?
So we are at a point right now where we've been having to make the decision of where we're going to register this IP. Canada and US is an easy decision. But as an early-stage company, we're probably still 12 to 18 months before we are globally selling product in Southeast Asia, which is our target market. So we're having to pick and choose which countries we want to register in. Each country is about $10,000. You have to pay for translation fees. You have to pay for the registration of the IP. And each country is different. Like, for instance, several of them are under the PCT. Taiwan is not. It's too much for a CEO to figure out on their own. So that's why the patent agent is key. You need a patent agent that has gone to school for 10 years to figure this out.
Christina Sjahli: So is a patent agent also a lawyer?
Susan Blanchet: No, they aren't. The patent agent is not a lawyer. Oftentimes, a patent agent is also trained as an engineer. Or you want to find a patent agent that is trained in the area that you want to register IP in. For instance, we are registering IP more in mechanical and linked also, with our next IP being our biofilter, we want someone with some expertise with plants or agricultural. So it's very key to find out if your patent agent has the background that you require, because they need to know the subject matter that they're going to be filing the intellectual property in. There's a lot of writing. Our patent application, it's like a scientific report. It has to be somebody with a background in the area you're filing.
Christina Sjahli: The role of a patent agent, if you can explain that a little bit more. Basically, they do the research for you?
Susan Blanchet: Yes. So our patent agent on our first patent came in, met us in our office, sat down with our engineers. Because at the time, I have a young engineering team as a startup. At the time, when I told them, I was wanting us to develop our IP strategy. They kind of looked at me like, "How are we going to get IP? This is normal." Because engineers' brains think novel things are just normal, right? They don't really understand that they are creating something unique and inventive. This comes back to at the beginning of our conversation, when I said it's more like an art, even though it involves so much science.
The intricacy of how there can be a novel difference comes down to the details. So he would explain the details of what they needed to show him to be able to be successful when he was defending the patent, once the investigator has started to ask questions. So for instance, using our filed IP as an example, if they had just said, "Oh, air comes in, flies around, and goes out." We never would be successful. But he explained the nuances of how important it was that the baffle system would speed up and slow down air at certain points that were close to the LEDs, allowing it to more quickly denature the bacteria or the viruses. It comes around, again, to the importance of engineers to have the patent education.
Christina Sjahli: I think the patent agent is that is the role, they the one that need to tell you how much is enough, right? They did the research, figure out like out of this big system, which pieces can be patent-worthy. After that, they submit the application, and then they basically sit down with the inspector and argue why it's patent-worthy. Is there anything else that I'm missing here?
Susan Blanchet: They kind of translates the engineering technical language into still technical but something that's very able to follow and something that follows the rules that are required by the registry, the patent registry. There's also one more piece. My patent agent is very good at individual pieces. But there's also a strategy piece. That's where the Innovation Asset Collective comes in. They've got strategists who will really sit with you and help you to think about what pieces you need, instead of just figuring out how to file specific pieces. So it's really sitting down with a strategist and a patent agent and trying to figure out your whole strategy of what pieces you want, at what time. Patents are only one piece of it.
There's other things like trade secrets, when you wouldn't want someone to know the intricacies of what you're doing. Whereas, the patent, people can read it and see exactly what we've developed, which makes it very able for them to copy it. At first I got quite nervous because I hadn't filed the patents on any parts of the Sentinel Air Purifier. But we had done one article in a magazine, and I had someone say, "Oh, as soon as you publish it, you can't file a patent on it." But it's not that cut and dry. You shouldn't, just for the the new startup entrepreneurs here, you shouldn't be publishing anything that you might put a patent on, just to be extra safe. But with ours, because it was just kind of a rendering, drawing of the Sentinel, and it wasn't a picture of the inside working parts of the UVC chamber, we could still file. But there is legalities around that, and to be safe, before you publish anything on something you want to file a patent on, talk to a patent agent or an IP lawyer.
Christina Sjahli: I feel just like listening to you talking about this, there has got to be like one exclusive department within your company just dealing with IP.
Susan Blanchet: Yes, I completely agree with you. I think we've talked about it with the IAC collective. Quite surprising that there isn't more IP courses for engineers. Because people think of IP as a legal area. I think of it, it's as much engineering as legal. It should be a joint course between the two that is ongoing. I don't know the percentage, but I would guess that a large percentage of patent agents are engineers.
Christina Sjahli: I agree with you. I think there's got to be a collaboration between engineers and the legal team for IP. It would be interesting for myself, for myself as a finance person, I would be interested to know, right? Because at the end of the day, the way I view it, any business decision, there's going to be financial implication. And if the finance person understand how it works, and then what is going on in this intellectual property journey, then the finance person can also be strategic in advising the type of decision to be made by the company.
Susan Blanchet: Yes and it also falls into the budgeting, right? So our finance manager, she's very involved in our budgeting decisions, and definitely, I want her to understand the IP.
Christina Sjahli: A lot of businesses or female founders or other founders, think of finance in a silo. The truth is, if at the end of the day, what you're going to show to investors or you yourself, as the founder, you will look at the financial statements. Then it's kind of like a bucket of information from all the decision-making within the company. Then, for sure, the finance person needs to know what is going on in the IP, maybe not to the detail of the engineer, but at least at a very high level, and then what is the impact, and then how that finance person can help in making the best decision for the company.
Susan Blanchet: I completely agree with you. I think it has to be like you say, more than just the surface level, they need to know at least the strategy that we have in place and how we're going to go forward. For instance, we are applying for another piece of IP this quarter. Then we're also registering our first IP, the plants, all over the world and trying to decide where we're going to do that. My finance manager's tied in because that's going to cost $50,000 to do five countries. Very quickly, you realize you can't go to everywhere you want to go. If I'm focusing on Indonesia and Singapore, but I also want to go to China and Philippines and India. How do I choose? And I have to do Canada and the US that's 70 to 80,000 for a startup. I can't do that. And I have to register those before the time limit or else like I lose my chance. So you have to choose, and some of those choices might be wrong. But you have to weigh all of the different potential yeses and noes.
Christina Sjahli: So far, if you can summarize, what are the benefits that you have seen about having an IP strategy in place?
Susan Blanchet: Yes, several benefits. So it's important for raising and it's important for receiving grants. I kept getting denied for grants in Canada because it was a US patent. This is important because there was a couple of other grants we'd applied for that had asked about IP and large Government of Canada grants. You know, that's one of the main questions. A couple of them specifically asked for Canadian IP. Because I know one of the mandates for the IP collective, which is what funds IAC is to increase Canadian IP. So I highly recommend Canadian founders to think about a Canadian IP strategy.
The other beauty of the IAC is it's a collective. So they purchase outside IP that you can, as part of the collective, use in your company. So if you can find like-minded founders that have similar interests to your company, you can actually have use of IP without having to pay to get it, which is another incredible piece. So that was one big wake-up call it was last December, we got turned down for the SDTC Seed Fund. I had everything else in place. They needed you to raise a minimum, I had raised over $200,000, 250,000, from seed fund investors or pre-seed, and everything else. I thought we were a shoo-in. Then in our interview afterwards, when we were denied the seed fund, they said, "Two things you're missing: one, in house IP. Come back to us next year with IP." And two, they wanted to have a known investor. Every pitch I've done, they ask about IP. They may not necessarily look into it at the pitch, but during due diligence, they're going to want to see the contracts you have surrounding your intellectual property.
Christina Sjahli: If you can say the lesson that you learned in your financing journey, what can you share with my audience?
Susan Blanchet: Well, I would say speaking as a female founder, the first pre-seed, pre-commercial round is extremely difficult, we came very close to the wire, and sticking to your guns, sticking to your gut, I completely can't emphasize enough how much you need someone who is either a CPA or formally trained with financials, statements, and performance to be there, holding your hand and helping you through. So you need someone who knows how to raise a round. I would just call and discuss what was going on with this person, more just having the backup. Like, you know, "Your gut is right. You do not want to go ahead with this." Even though it's really hard sometimes when you're getting close to the edge, which all startups do, and you're worried that you're not going to hit your payroll in a few months, having someone that you can talk to about whether or not it's a good idea.
Also, you have to be able to hit the hard questions quickly. It was just a very simple, I call them like gatekeeper questions, like ask those gatekeeper questions first. Tell them what your valuation is. Tell them how much you're raising and what percentage of the company that would be if it's an equity round. Or if you're raising on a convertible note or a safe, tell them what the discount is. If they're not interested, get rid of them fast. There's no point stringing along someone that you're never going to have a deal with and wasting your time.
Christina Sjahli: Susan, this has been a pleasure. I would love for you to tell my audience where can people find you?
Susan Blanchet: Come check us out at origenair.com. That's o-r-i-g-e-n-a-i-r dot com. We are a startup of about 18 employees now located in Victoria, British Columbia, and soon coming to places near you. Our focus is commercial buildings. Hopefully, you will see our beautiful Sentinel, cleaning the air around you soon.
Christina Sjahli: Thank you so much, Susan.
Susan Blanchet: Thank you so much. It was an absolute pleasure, Christina.
Christina Sjahli: And that's bring us to the end of another show. Thank you so much for listening to another episode of Her CEO Journey, the business finance podcast for women entrepreneurs. If you want to create a proactive financial plan and process for your business so you are ready to weather the financial storm over the next few months, let's chat and see what's possible for you. Book in a time to speak with me at christinasjahli.com/lets-chat.