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Patent Considerations for Startups

09.15.2023

As many of those involved in startups know, patents can be a source of frustration and perceived as a waste of precious capital. One aspect that is hard to square for many founders is that startups are typically concerned with short-term goals, whereas patent protection is very much a long-term investment. Patents typically reveal their value years in the future, when the startup is longer a startup. And because there is a time-sensitive element of patents, cost-conscious startups that wait too long to address the prospect of patenting their innovations may end up entirely forfeiting any benefit they may have otherwise obtained.

Balancing the budgetary concerns of the startup with the long-term goals of the established company can be difficult. To help navigate these decisions as they relate to filing a patent application, there are several considerations that should be weighed, including:

  1. Maintaining Any First Mover Advantages:  Being first to market is a great advantage but can be lost if it doesn't quickly lead to large market share or brand recognition. If you don't have those differentiators (or if you want to explore additional protections), patents can provide another way to distance your company from competitors. Without patent protection, you may be inviting others, especially larger competitors, to freely offer your innovation as their own. 
  2. Reverse Engineering:  How discoverable is your innovation? (For example, is it a process performed by a back-end server that would be hard to identify, or is it a consumer-available product?) How easy would it be for a competitor to reverse engineer your innovation? If it's discoverable and easy to reverse engineer, patent protection could provide some measure of protection against would-be infringers. If not, maintaining your innovation as a trade secret may be preferable.
  3. Geographic Focus:  Where are you focusing your business efforts, and where do you plan to do business in the future? Foreign patent protection can become extremely costly, so it is best to be strategic in deciding where to file patent applications.
  4. Enforceability:  If you were able to obtain a patent on your innovation, how easy would it be to identify infringers? If you are interested in patent protection in foreign countries, how difficult is it to enforce patents in those countries?
  5. Investors:  How likely is it that your investors or potential investors will want to see that you're taking steps to protect your innovations?

There is no one-size-fits-all decision when it comes to patent protection for startups, but there are many considerations that can make patent decisions easier to make.

There are only 3 competitive moats: first mover advantage, branding, and patents. The strongest moats combine all 3.