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The Global Chip Shortage Will Lead to New IP

Thanks to the proliferation of the use of chips in consumer electronics and the global chip shortage, the terms “design for availability” and “design for procurement” have become part of the tech startup lexicon. Many early-stage startups working on product development are finding themselves scrambling to obtain the necessary components to build prototypes, and later stage companies are struggling to procure enough parts to allow them to obtain and fulfill customer orders in a timely manner.  With no clear path to supply chain recovery, founders would certainly prefer to see a return to business as usual. But the current situation brings to mind the saying “Necessity is the mother of invention” - the chip shortage presents opportunities for the creation of new products and processes, which could result in new intellectual property.

During a recent ventureLAB webinar on Why Hardware Product Commercialization is Hard, Antonio Nucaro, Vice President of Engineering at Micro Interface Design (MiD) referenced design for availability and spoke about how MiD’s client companies are having to design around chip shortages. Antonio stated that founders shouldn’t be discouraged by scarcity but that it can be helpful in the early stages. Scarcity, combined with the limited resources of the typical startup can become the impetus to overcome hurdles with minimal cash. His comments got me thinking about the link between innovation and the creation and protection of intellectual property. 

Having to work around the chip shortage may result in the use of more or larger components, resulting in bulkier or more complicated products than is ideal in order to achieve the desired end result. It’s unlikely that taking a step back technology-wise will result in the creation of intellectual property (though care should be taken that reverting to older products and methods doesn’t result in the infringement of others’ intellectual property). On the other hand, out-of-the-box thinking that results in simplified products that achieve the same or better results with fewer or simplified parts could result in the creation of new intellectual property. For example, companies affected by the chip shortage may seek to complete hardware-based tasks using software instead, potentially creating new intellectual property in the process. Though software per se can’t be patented, software-based inventions that achieve a technical solution to a technical problem can be, and software is automatically protected by copyright. Where software can’t be patented, it may still be able to be protected as a trade secret as well. Where companies come up with new hardware solutions altogether, patenting and industrial design protection could be explored.

The chip shortage may also have other impacts on existing IP. The chip shortage is forcing founders to forge new partnerships and adopt new ways of doing business. Founders may be sourcing parts from new suppliers in order to design around the shortage, or dealing with brokers in order to find parts to manufacture prototypes or fulfill existing orders. Working with new partners could mean exposing a company’s intellectual property to new, unproven networks. During the webinar, Antonio also underlined that the use of virtual prototyping can save companies money if it means they have to build fewer prototypes to validate their designs. Sharing virtual prototypes with a broad audience is much easier than presenting a physical version to interested parties, but founders should be mindful of the proprietary information they share.  When it comes to trade secrets and as yet unpatented inventions, they should ensure they protect their intellectual property using all the tools at their disposal. For example, sensitive information should be shared strictly on a need-to-know basis and non-disclosure agreements should be put in place whenever possible. 

As challenging as the chip shortage is proving to be, founders should keep IP considerations in mind as they and their teams forge new ways of working and implement work-arounds to deal with the current reality. Protecting existing IP, and identifying and protecting any new IP they create, could mean the difference between suffering through the chip shortage or thriving as a result of it. 

Josée Pharand, Director, IP Programs and Policies

About Josée

Josée is passionate about intellectual property and loves helping founders protect their IP. Before joining ventureLAB she served as a Director for Canada’s Innovation Superclusters Initiative and was responsible for the program’s intellectual property framework. Josée has a Bachelor’s of Applied Science in Mechanical Engineering and spent several years in the private sector before joining the Canadian Intellectual Property Office (CIPO), where she found her true passion in intellectual property and innovation. Highlights of her thirteen years at CIPO include representing the Government of Canada in negotiations on international patent harmonization and working to implement the Patent Law Treaty.

About Micro Interface Design (MiD)

Micro Interface Design provides Capital and Product Assembly Services, innovative Dosing and Dispensing solutions for Colorants and Additives. Founded in 1981, the company is specialized in design, development, and production of advanced Automation and Auxiliary equipment for plastics industry. For various Dosing and Dispensing applications in your process, MID line of Colorants and Additives equipment is available from a single source. MID has built a solid network of accessible service partners, technical knowledge, spare parts, and site support. Global, Reliable, and dedicated to Partnership. You can always rely on Micro Interface Design.

About ventureLAB

ventureLAB is a leading global founder community for hardware technology and enterprise software companies in Canada. Located at the heart of Ontario’s innovation corridor in York Region, ventureLAB is part of one of the biggest and most diverse tech communities in Canada. Our initiatives focused on raising capital, talent retention, commercializing technology and IP, and customer acquisition have enabled thousands of companies to create over 4,000 jobs and raise more than $200 million in investment capital. At ventureLAB, we grow globally competitive tech titans that build-to-scale in Canada, for global markets.

Original Article on ventureLAB

ventureLAB is a leading global founder community for hardware technology and enterprise software companies in Canada. Our organization is led by seasoned entrepreneurs and business leaders with decades of industry experience in building IP-rich start-ups, scale-ups, and global multinationals to help you scale your business. Located at the heart of Ontario’s innovation corridor in York Region, ventureLAB is part of one of the biggest and most diverse tech communities in Canada. We enable technology startups to accelerate the commercialization of transformational products on a global scale.

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