Patent Decisioning for the Bootstrapped or Early-Stage Startup
What is Different about Startups?
A startup’s ability to compete against larger, more established players, eligibility to submit bids, or eligibility to become qualified vendors of larger companies or governments may be depend on patent protection.
The acquisition price of the startup often depends on its patent protection.
A startup needs to be able to talk openly about its technology to win clients and investors. Talking without a thoroughly written patent application on file presents risks.
The funding choices a startup makes, or the limited window of exploitative opportunities, sometimes mean that startups have a binary all-or-nothing fate that will be determined in a short period independent of patent protection.
The cost of a worthless patent to a startup is infinitely more expensive and resource intensive than it is to a large company.
Sometimes an investor won’t offer investment to a startup unless it can show it has IP or a protected market position.
A startup is so dynamic that the patent decisions about its products are at best an educated guess. Compounding this fact is that each new customer’s want and each new investor’s opinion is a challenge to maintaining the existing product.
Extending the patent prosecution process with expensive rounds of office actions and appeals to get the broadest claims possible can be more deadly than narrower and faster claim scope.
It’s hard to recover after choosing the wrong professional to draft a startup’s patent applications.
While a startup’s business opportunity may be global, its business is likely local or national at best at this stage. The out-of-pocket costs of international patent protection are unfathomable as are the complex agreements with international business partners at this stage. To further complicate international expansion, some distribution/franchise laws make disengaging with international partners prohibitively expensive and difficult.
What can you do?
Understand why you are engaging the patent system. Recently, I talked an inventor out of making the investment in a patent application because together we could not articulate a reason about why the patent would help the inventor’s business. While some companies choose to fight for the broadest claims possible, other companies merely want patents to assist with getting investors interested. Other company’s business models shift so fast that whatever patent applied for will likely not be relevant by the time of grant. Other companies think their customers will be persuaded to purchase their products if they are “patent pending.” Other companies have a business/product strategy and industry relationships that depend on patent protection. Figure out your why and write it down. Return to it frequently when you are considering pouring more money into your patent protection.
It’s about preserving options. If you don’t have the funds for a non-provisional, filing a provisional is better than nothing. If you think you might go international, a PCT application buys you time and holds your options open while you can figure out your strategy and your funding. In your application, you can describe unclaimed subject matter with the idea you may be able to pursue it later. Be careful, as a hasty application or hastily described embodiment might not get you to the destination you were striving for.
Choose wisely. While you can always change your attorney later in the process, we recommend choosing a registered patent attorney or agent (patent professional) that understands the business of startups, that will take the time to understand your business and technology and that can set accurate expectations for you on the process and costs. Avoid working with invention companies that are not patent professionals/law firms. The patent professional you choose to work with for a U.S. application needs to have a registration number at the USPTO. Look the professional up and confirm the registration number exists. https://oedci.uspto.gov/OEDCI/practitionerSearchEntry (The lower the number, the longer the patent professional has been registered.)
Know how much it is going to cost and what you are able to spend. Someone not in your shoes might try to make the argument that you can get funding to finance your patent and make the issues herein moot. If that were the case, you likely would not be reading this article. If you cannot afford the patent while still proceeding down the patent route, you likely cannot afford to sustain or build your business in the years waiting for a patent grant. Choosing not to engage with the patent system is a valid choice.
That being said, if you’ve read this far and still need a patent application, consider silverlegal if you need a one-stop law firm and business advisor for your startup needs including patents. You can sign up for a paid consultation here.
Nothing in this posting should be construed as legal advice. If you have a legal issue, talk to an attorney registered to practice in your jurisdiction about the specifics of your situation.
This is legal advertising for Silver Legal LLC. Mr. Silver is licensed to practice law in Georgia and registered to practice before the USPTO as a patent attorney.