This is a guest blog by Pete Tormey, one of the moderators for our San Francisco and East Bay Bootstrappers Breakfasts. Pete is serial entrepreneur and a patent attorney, his firm is Antero Tormey. Pete is also the author of “Startup Guide to Intellectual Property: Early Stage Protection of IP.” It’s a great primer written in a clear conversational style that is practical and to the point. It answers the the basic intellectual property questions for startup founders.
Should I Patent?
Patents are generally the most expensive intellectual property; therefore weigh the costs versus the benefits before spending money on a patent. Don’t succumb to the pipe dream — patents are expensive to get and expensive to enforce. Merely having a patent won’t make you rich. As an entrepreneur, you probably have better things to do with your money — like R&D or marketing.
Before deciding to patent, consider that a cell phone isn’t an invention – it’s a collection of inventions. These inventions range from the operating system, to the touch-screen, to the radio transmitter. Some people claim there are over 20,000 patents involved in a modern cell phone! For the startup, the trick is to identify the key technologies and patent them. A key technology is one that makes your product faster, better, or less expensive than the competition. In other words, a key technology provides a major competitive advantage.
When You Probably Patent
If your invention does something truly surprising, like turning straw into gold, then obviously you should patent it. However, most inventions are relatively simple improvements on well-know technologies. One quick way to determine if an invention is worth patenting is to honestly ask yourself how hard it would be to design around your invention. If it’s easy to design around then don’t patent it. However, if you cannot design around it easily, consider patenting.
Can your invention be used in multiple products or is it a one-trick pony? If your invention has a broad application, then patenting might be a good idea because it can help generate multiple revenue streams. Can your invention be used in multiple products? Are there other companies (besides your competition!), that would like to license your technology? The more there are the more valuable your patent is likely to be.
Can you calculate the amount of money (or time) your invention saves? People see the value in saving money, so consider a patent.
If you are planning on selling your business quickly or taking on investors, patenting may be a good strategy. The public believes patents show that a company is creative and has more value. A large patent portfolio might help you get a better selling price or a better term sheet from investors.
Patents can help sales too. The public likes to see “Patent Pending” on new technology. It gives them confidence in the company.
If your product is very visually oriented, then consider design patents. They are easy to get, less expensive and easy to enforce. But their value is best for companies whose products have a unique look. Especially if the unique look is associated with a company’s image. Think Apple, Nike, and BMW.
If your invention is in a fast moving technology area, you should patent if it’s a very forward looking invention, but not if your invention is likely to be obsolete soon.
When You Probably Shouldn’t Patent
If your invention can be kept a secret, then don’t patent. Recent laws have made trade secrets stronger. If it’s hard to tell from your product how it was made or what’s in it, then trade secrets should work for you. Even software can have trade secrets – especially if part of the work is done on your server and is not exposed to the public.
If your invention is merely a better Google or a better Facebook, it’s probably not worth patenting. Google and Facebook have teams of people making a better Google and a better Facebook. Your invention is unlikely to compete with them.
If you can think of other, easy ways to do what your invention does, then maybe you should not spend money patenting it. It won’t give you value for the cost. More importantly, the invention is probably not critical for your product.
If your invention only has a few potential customers, then it is probably not worth patenting. Take the automotive industry as an example. There are less than a dozen major car manufacturers. If your invention only has value to a car manufacturer, you will have a hard sell and are not likely to see a return on your patent investment.
Most startups are in this maybe category. As a general rule, if you are not sure you should patent, then don’t. Also, inventors have a one-year grace period to file for a patent. This grace period starts when you first offer the invention for sale or use it publicly. While there is a risk that another inventor might file for a patent before you, knowing the market for your invention will help you decide whether to patent. So if you are unsure, get it on the market and see if your product is worth it.
If your invention is simply an improvement to an existing product, I’d wait to patent.
Creative people are creative. Most don’t have a single invention, they have dozens of them. If you choose not to patent, don’t worry. Another opportunity will come to mind.