Start-ups and Patents

Start-ups and Patents: at first, it does not seem the most logical of combinations.

The image of a Start-up is usually a young tech-driven company very busy working on brilliant ideas, marketing and the internet.

When thinking about patents, more often large companies like Apple and Samsung come to mind often competing and fighting their expensive patent wars. In addition patents are thought of as being very costly to obtain to market and to protect.  And yet, having one or more patents can be of enormous value to a start-up on a number of different levels.

A patent is proof of creativity and innovation. If your company has developed a technical product or innovation, it is certainly wise to consider applying for a patent.

A patent is the proof that you are the first to develop a certain idea. With a patent, you have exclusive rights to your idea.  It also allows you to license it and protect it from all those who may attempt to infringe on your rights to it.

Your monopoly

If you’ve had an opportunity to read the must-read book for start-ups,  Zero to One by Peter Thiel, then you know that every business should strive to obtain a monopoly.  With a monopoly you have a much stronger business case. A company with a monopoly on a product or process in a technology sector which a patent provides  can more easily obtain a dominant position in the market.

This dominant position can trigger a positive cash flow which means corporate viability for the long haul.  Venture capitalists and investors are crazy for enterprises which own Patents. Research in the US even indicates that having a patent gives you a 97% better chance of obtaining funding.

Making Money with Your Patent.

If you have patented a technology you can always apply that technology to your own products and services but you can also license your patent to a third party. Licensing a patent can provide a constant cash flow for years to come which can be used  to finance expansion or to invest in further research and product development.

In addition, a patent provides you  with a strong marketing tool and corporate differentiator.  A patent demonstrates to your customers  that you are innovative and able to develop a unique technology and properly protect it.  Owning a patent can give you a distinct competitive advantage that could justify a higher price point. P for Patent is fifth P in the marketing mix.

Think ahead about intellectual property.

We have talked about the benefits of having a patent, but equally important is to make sure that you do not infringe on the intellectual property of others.

If you plan to bring something to market that has already been patented, you run the risk that the patent holder will accuse you of infringement which can be a very serious and costly matter with unintended consequences.

If you infringe on a patent you may have to negotiate a licensing agreement or come to a settlement of some kind. If that doesn’t work,  a lawsuit may be the next step. That’s something you want to avoid because the costs of such a lawsuit can amount to $ 50,000 or more and can produce unwanted and damaging publicity as well as substantial monetary damages if a judgement is rendered against you.

Potential infringement can be prevented in an early stage of product development. You can easily perform a freedom to operate search. Then you can see if what you have invented or developed, infringes on what has already been registered or patented. This saves a lot of potential hassle and expense.

As a technology based startup you are wise to think about patents in the earliest stages of your company evolution. Patents can bring in substantial revenues and save you a lot of money!

So Start-ups and Patents are at the end of the day a very logical combination.Patents4all would love to help you work through all of the topics mentioned above.