Will Your Startup’s Patent be Expensive Today & Worthless Tomorrow?

The prevailing view of patent experts who advise innovators–be they individuals or companies–it that patent filings should occur as early as possible. This advice, which is even more prevalent now that the US has moved to a “first to file” system, exacerbates the significant problem of worthless patents that I have written about previously. To summarize, by “worthless,” I mean that the innovator’s patents will not cover anything that consumers desire to buy. Logic thus dictates that patents will be irrelevant to the startup, as well as expensive wastes of time, unless protection aligns with a validated customer demand for the innovator’s product or technology.

This is where a key difference falls out between the patent filing strategies for established companies and startups where each is developing innovative products or technology. The former already have products in the market and customers that they (should) understand, as well as the means to get new products to market through existing distribution channels. In short, established companies possess one or more existing validated business models. Startups have none of these which, as Lean Startup teaches, means that they are still on a quest to validate a sustainable business model. An established company thus has a substantial leg up on the startup when matching patent protection to customer demand because a higher probability exists that it has, in fact, identified a real unmet need in the marketplace and has generated a product or technology innovation that will address the needs of its customers. In contrast, the startup with an idea for a product or technology innovation must first test the hypothesis that customers exist for the innovation idea, where the testing process often reveals the need for multiple pivots that require the product or technology concept to be modified from its original conception. In short, for an established company, an early patent filing will more likely be grounded on the existence of real customers that can be served with an innovative product or technology, whereas the opposite is true for the startup.

The solution to this problem for startups is to delay patent filings until customer discovery demonstrates that a validated business model exists for a product or technology idea. Of course, waiting to file runs counter to the usual patent filing advice. This is due to the general belief that discussing the idea in public can result in either or both of the idea getting stolen or preventing the ability to obtain a patent because of legal restrictions on filing following certain public disclosures. However, customer discovery done correctly poses little risk that the startup will publicly disclose the product or technology. (In short, if you’re disclosing the product or technology details when conducting customer discovery, you’re doing it wrong. I will write more about how to balance customer discovery and patent filings in a subsequent post.)

While it is somewhat risky for startups to wait to file because there is a possibility that someone else might beat them to the Patent Office, I believe that there is a larger risk that the startup will waste money and time obtaining patent protection on a product or technology that customers don’t care about. That is, there is more risk for the startup if it obtains a patent that does not align with the company’s validated business model and, as such, is “worthless.” Startup patent filing strategy should therefore differ from that of established companies that already possess validated customers, markets and distribution channels. Accordingly, startups should wait to file for patent protection until they have conducted sufficient customer discovery to demonstrate that a strong customer demand exists, but they should indeed be prepared to file quickly once that demand has been validated.

Those seeking more insights into patent and IP advice specifically directed to the issues facing startup ventures should search “Jackie Hutter” in the search bar on this blog or contact me at jhutter@leanlegalteam.com.