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Does My Startup Need a Patent?

by Jackie Hutter

“Does my startup need a patent?” As a leading IP advisor for startups in Atlanta, I am asked this question a lot, and my response always begins: “the only person who needs a patent is a patent attorney.” Indeed, if a patent attorney cannot convince clients like you that their startup needs a patent, her business will quickly fail. But whether a patent will affect the success or failure of your startup requires a much more nuanced analysis. In short, you should be skeptical if a patent attorney recommends that you move forward with a patent without also advising you to first fully evaluate your startup’s business model, go-to-market strategy and the competitive landscape, as well as working with you to determine how the available patent protection may allow you to realize your startup’s revenue and exit goals.

This is not to say that patents are never the right thing–or even often the right thing–for startups. To the contrary, there are lots of examples where patents served as a primary means of startup value creation. Studies nonetheless show that only a small percentage of patents become valuable business assets, even when the filers are sophisticated companies with large patent portfolios that retain expert internal staffs to manage their IP strategies. This indicates that most companies end up missing the mark when it comes to protecting their innovations using patents. Moreover, startups pay 3 times or more for patents than do their larger corporate counterparts, meaning that the low return on investment from patents is often exacerbated for smaller businesses.

In order really know whether they need a patent to capture the value of their successful startup concept, entrepreneurs require a better understanding of how patents and patent information can be integrated as part of one’s overall business strategy. Of course, this means that they must expend the time and effort to learn the basics of the somewhat arcane and opaque world of patents. In other words, you don’t become fit just by hiring a personal trainer, just as you don’t create patent value by hiring an attorney to obtain a patent for you. You have to do the work to create and realize the value to get the results that matter to you. Certainly, it would be more helpful if experts like myself were better able to explain patents in ways that didn’t make most business folks immediately want to fall fast asleep. But the use of seemingly unintelligible language by patent attorneys is no excuse for entrepreneurs failing to step up and understand whether and to what extent patents will (or will not) make it “cheaper for competitors to go through you than around you.”

So, be forewarned–asking a patent attorney if a patent is the right thing to do is a bit like “having the fox guard the hen house.” The mere posing of the question often starts entrepreneurs down a path of patent action that is difficult to undo, especially in the face of expert opinion validating such action. At a minimum, the failure to hold enough knowledge to assess the appropriateness of patents in your situation will lead to second guessing and confusion that wastes your entrepreneurial resources. It is therefore incumbent on entrepreneurs like yourself to better understand in general how patents and IP can be leveraged to create (or not) business value. Only when you are armed with this basic knowledge can you be sure that a patent is the right thing for both your attorney and your startup.

I will continue to write about IP and patent strategies in future posts here.  Prior posts on startup-specific IP topics can be found at my author page at Hypepotamus.com. Those seeking more in-depth information on IP Strategy topics should visit my IP Asset Maximizer Blog, where I have been writing on creating winning IP Strategies since 2008.

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