Crowdfunding is the practice of funding a project or venture by raising monetary contributions from a large number of people, typically via the internet. It’s a good way to further finance your business when you have limited funds.
However, it’s important to remember that protecting your intellectual property (IP) is critical when establishing your presence in the market. Making the investment into your IP before launching a crowdfunding campaign could be the difference between success and failure.
This is because your idea usually has to be ‘new’ or ‘unique’ to adequately secure IP protection. If you put it on Facebook or a crowdfunding site beforehand, chances are you’ve automatically degraded that status
The Scrubba Wash Pack
Ash Newland is the creator of the Scrubba Wash Bag; the world’s smallest washing machine. Three years ago he published his venture on the crowdfunding site IndieGoGo. He’s just launched his new Scrubba Wash Pack. On both occasions, he made sure he protected his IP before he went public with his portable products.
It helped that Ash is a patent attorney by trade. So far, he has not had trouble with grafters copying his designs or any known infringements. ‘I think this is a result of our strategy to clearly identify that a patent was pending. We also highlighted my role as a patent attorney within my company,’ Ash explained.
‘As our method of manufacture is also unique there are significant challenges to directly copying our product. We also have patent applications filed to cover this manufacturing process.
‘Being a patent attorney, IP was a major focus for the Scrubba Wash Bag. I started by filing a provisional patent application when I had the idea for the Scrubba Wash Bag in 2010, though my path to market at that stage was to license the invention. It took 18 months before I changed focus and decided to crowdfund. By this stage I had already filed an international patent application under the Patent Cooperation Treaty (PCT).
‘In the tech and injection-moulded product space, design and production can be really quick. Without IP protection counterfeit products can hit the market quickly, sometimes even before a crowdfunding campaign has finished,’ Ash explained.
Importance of protecting your IP before launching on crowdfunding sites
‘Many start-ups end up having to let their idea go because they didn’t look at IP from the start. If you have filed a patent application, mention this in your crowdfunding campaign. Be sure to use the term ‘patent pending’ rather than ‘patented’ until you actually have the rights granted.
‘For many people in the start-up phase, the costs of patents and designs can be daunting and IP is often put in the too-hard basket. Unfortunately, for both patents and designs, it generally isn’t possible to wait for your campaign to be successful and then file an application as your own disclosure can prevent you from getting IP rights.
For highly successful campaigns, this means that competitors can simply copy your product after you have done the hard work demonstrating that there is a market for it. Ash suggests considering the following when crowdfunding:
- don’t rely on grace periods
- designs can be inexpensive so look at protection from the start
- get a provisional patent from the start, and don’t disclose too much from the start if you’re going public
- find a good patent attorney, one that knows the technology and that you can meet and discuss openly with.
The Scrubba Wash Bag has been on the market for four years. As the world’s smallest washing machine it has helped travellers and campers all over the world. However, Ash realised the Scrubba Wash Bag wasn’t utilised by travellers between washes. He wanted to make his product more functional, hence the Scrubba Wash Pack - a weatherproof day pack by day and a portable washing machine by night – was born.
Ash describes his experiences with crowdfunding sites as positive.
‘Back in 2012 we hoped to list on kickstarter.com. However, at the time you had to be a US citizen so we ended up listing with IndieGoGo.com. While Kickstarter is now available to Australians, we decided to stick with IndieGoGo for the Scrubba Wash Pack as a way to support the platform that was originally successful for us. Both platforms are a great way to credibly take pre-orders and get widespread coverage for your venture.
‘Half of our pre-orders came directly from people searching through the crowdfunding website and we have found that the global media use crowdfunding campaigns as a source for stories.
‘The first campaign had a conservative goal of US$2500 and we ended up raising US$2500. This funded the first production run and fulfilment without us going into significant debt. Some of the money also went towards creating a website, branding and other start-up expenses.
‘The purpose of the second campaign is slightly different as we are treating it more as a way to launch the product on a global scale and see if there is a market for the new product rather than to raise funds.
‘The campaign has been successful and the market for the product has been validated with around 300 Scrubba Wash Packs heading off to early adopters around the world. We also surpassed our target of US$15000 by over US$10000. As the campaign wasn’t about raising money, we have dedicated our donation of US$10 000 for building a well in Ethiopia to our crowdfunding supporters.
Setting your fundraising goals
In regards to tips for using crowd funding, Ash believes it’s important to set realistic goals.
‘At the bottom end of the scale it’s important to request enough money to actually deliver the product. At the top end of the scale, if you set the goal too high, you may not get funded. Try to set your goal somewhere between and then try to exceed it.
‘Setting a relatively low target will ensure you can deliver the product. Then when you hopefully smash your goal there will be a better story to tell and you may get further media coverage,’ he said.
Additionally, Ash had a publicist draft a press release that would appeal to journalists. ‘Before bed one night I emailed the press release to Gizmag and Gizmodo and I woke up to hundreds of emails and orders, which is what really kicked it off. Hundreds of websites then reran the stories from these two sites so there was a huge return for little effort.’
International filing considerations for IP
Ash also talks about his international filing considerations for IP. ‘We have always considered that the Scrubba products would be global products and as such our IP strategy has been to file patent applications, trade mark applications and design applications internationally. The Scrubba products are patented or patent pending in over 50 countries and we have trade mark registrations in over 40 countries.
While our filing strategy has been a substantial financial outlay, it is important to recognise that many of the costs come over time. Filing a provisional patent application allows you 12 months before taking the next step and a subsequent PCT application allows you a further 18 months before you need to choose your countries. This timeline can allow you to gauge what markets are important to you before making firm commitments. To maximise your time, I would suggest filing the provisional application just before launching your crowdfunding campaign (or just before your first public disclosure).’
- Find out more about Crowdfunding from business.gov.au.
- Have you developed a brand? Protect it with a registered trade mark. You can learn about trade marks, search for existing trade marks and apply for a trade mark.
- Protect the way your product works with a patent. Learn about the benefits of patents, search for existing patents and get an idea of how much a patent may cost.
- Protect the way your product looks with a design. You can learn about designs, search for existing designs and apply.
- Understand your commercialisation options to monetise your IP.
- If you’re an entrepreneur or start-up our IP – your business edge magazine helps steer you through how protecting your IP can help grow your business.
- We understand the IP system can be complex so we’ve put together the basics for patents, trade marks, designs and plant breeder’s rights.