Semiconductor SMEs juggle trade secrets with patents, says panel

Tech experts advise startups on routes to protect their IP at London tech event | AI, supply chain security, and freedom to operate discussed by senior IP heads and an investor | UK ‘should make every effort’ to reengage with the UPC to help the industry.

Semiconductor startups should balance trade secrets with the disclosure of patents when protecting their technology, IP leaders in the space have urged.

Speaking at the International Semiconductor Conference, held March 14 in London, a panel of senior IP heads at companies in the space advised startups and small businesses on how IP rights can be used to support semiconductor businesses as they grow.

Additionally, the UK’s retraction from the Unified Patent Court has affected semiconductor SMEs.

“For SMEs with limited resources, having a choice of options is helpful. One potential route to UK coverage is now not on the table," said panellist Anne McAleer, head of IP at Cambridge-based Paragraf.

Andrew Thompson, partner at EIP, who moderated the panel, urged “every effort” should be made by the UK government to re-engage with the UPC in the future.

Finding the valuable IP

McAleer highlighted the challenges faced by companies in the industry, including identifying valuable patents among a lot of inventions. "It's about trying to work out how to create those amazing patents," she noted, stressing the importance of long-term vision and flexibility in IP strategy.

“It’s about creating those jewel patents and it's really difficult when you’re at a very early stage company,” McAleer added.

Audrey Stone, board advisor and founder at Blueshift Memory, said having a dynamic IP strategy was essential for small companies.

“You need to consider where your final product is going to be marketed, your targeted audience and focus your capabilities on protecting those markets,” said Stone.

“A lot of times the avenue you take to get there will be determined by how you are adjusting your patent strategy,” she added.

Providing an investor's perspective, Ian Lane, partner at Cambridge Innovation Capital, emphasised the importance of creating platform technologies—the foundations for building and running business applications—as they provide multiple different avenues for success.

This approach involves pursuing different verticals to increase the chances of success and adaptability over time. However, managing this diverse strategy can be difficult, especially for small teams or limited budgets.

"The fear sometimes is that companies end up trying to do too much in parallel," noted Lane.

Balancing trade secrets and patents

There's a challenge in balancing what to protect with patents, which require public disclosure, and what to keep as trade secrets, the panel said.

Stone said it is important to engage with customers to understand where your product fits in the market, despite the challenge of balancing IP protection and discussing technical details.

Early-stage technology companies often struggle, as they need to convey their solution to potential customers without revealing too much.

It's essential to recognise the sensitivity of discussing IP-related matters in certain professional settings, as it can affect progress if it's not approached carefully, warned Thompson.

Traditionally, patents were associated with tangible products, while trade secrets protected internal processes.

However, this distinction is changing particularly for diverse businesses, according to Lane.

He explained that trade secrets are increasingly viewed as a cost-effective means of protection, especially for companies in open hardware or open-source sectors.

Stone suggested that managing licensing relationships for patented inventions is easier due to their clarity and scrutiny by patent offices. In contrast, trade secrets are more intangible and challenging to define, as they rely on undisclosed know-how.

Despite being cost-effective, managing trade secrets requires collaboration across various departments, including research and development, production, and commercial teams, added McAleer.

Lane suggested maintaining a balance between IP protection and IT security.

In some industries ensuring the freedom to operate is crucial, however, in deep technology investing, such as semiconductors, the focus on freedom to operate is less pronounced in the early stages, he said.

Lane highlighted the complexity and expense associated with obtaining freedom to operate insights, especially in the early stages of tech ventures.

"It's important that you are the first one to market but at the same time, navigating the timeframes of the semiconductor market, especially if you are dealing with a product that is incredibly capital intensive, is very long," Stone said.

"The time is very much against you as investors also want to see the benefits of their investment fairly quickly," she added.

AI’s impact on the semiconductor industry

Addressing how AI will impact the semiconductor industry, Stone said the technology accelerates processing speed while reducing energy consumption. It will also revolutionise product development and optimisation.

However, Stone hammered home the importance of ensuring the security of the supply chain, particularly in the context of developing trustworthy AI systems.

The integration of AI introduces new security risks, necessitating robust measures to protect intellectual property against potential threats posed by learning models and other AI technologies, said Stone.

Additionally, Stone noted "security by design is crucial," including the integration of cybersecurity measures throughout the supply chain.