Startups shouldn’t pursue patents

Starting up? Forget about patents – at least for a while. While there are definitely exceptions, 99% of startups shouldn’t try to “patent their idea” or even attempt to patent processes or products that will be at best, half-baked.

Twice last week, I was called upon to give advice about patents and intellectual property in general. For the latter see respectip.org – another blog that I just got started on. The first of those opportunities was to a group of about 40 entrepreneurs and would-be entrepreneurs at an accelerator called SparkPluggers. The fact that so many were interested in such a session clearly showed (no offense intended) of their lack of understanding of Intellectual Property. Of course there were knowledgeable people in the audience, but in general, their interest in patenting anything from their “business model” (forget about it) to actual prototypes of medical prostheses demonstrated a range of understanding from naive to sophisticated.

The second time was a one on one session with a very bright entrepreneur who wanted some protection to pursue his business without having to worry about someone copying him and getting ahead of the game because they had more resources. He was interested in attracting investors and wanted them to feel that they were reducing their risk, because the “idea” was protected.

Both of these are valid reasons to look into getting Patents, perhaps into trademarks or copyrights (although the latter two are typically weaker protection for a business). But it is important to be very clear about the costs – both in time and money of pursuing patents, because it simply is not for everybody.

Here are five reasons why a startup shouldn’t worry about patents for a while – at least until they have customers.

  1. Rarely are raw “ideas” good enough to patent. When ideas are actually deployed in practice, you discover flaws in the “implementability” of those ideas – primarily because you simply can’t think of everything, but equally because the customer needs you are trying to serve are not well understood. And nor is the fit between your idea and the customer needs well understood. If they were well understood, someone else would have also understood them and would have been serving those needs. Solving those real problems of market deployment as well as the internal processes that allow you to create a good solution changes your idea so it is actually different from others who have had the same idea (trust me there are many) and you actually derive innovative processes in the implementation phase. And processes are what really makes a patent. Detailed, step-by-step processes are the result of attempting to implement an idea in the real world.
  1. Patents are costly. I have spent over $100,000 to date and we are not all done yet! This is for five US patents and 1 Indian Patent plus four pending applications. Not only are there initial costs, but the examination is a costly process and a surprise to many first-time patent seekers. Every time the examiner raised an object and we had to respond, my attorney’s fees were in the thousands of dollars!
  1. Patents take a lot of your time. I took eight months of doing nothing else. I would have been better off refining my product and then patenting it. And I would have been benefited from pursuing customers at that stage, which would have really helped cash flow.
  1. Solving problems for customers in an innovative way is the way patents are created. No longer in R&D labs, but in the hustle of serving a customer. And customers give a better perspective into the actual usage of the product or process so that it is more “useful”. It is important to recognize patents are utility patents, in other words they must be useful. Plus, the patents, even if granted, are not going to have much value if they don’t address real problems faced by potential users.
  1. Investors are not going to be impressed by patent applications – most applications either don’t result in patents or result in very narrow patents that are not much use at all. So, patent applications don’t really mitigate risk for investors, which is the supposed intent of filing patents.

Overall this also fits into the “Lean Startup” and my own “Very Lean Startup” philosophy, because a startup’s focus should be on recognizing and delivering on customer need – everything else is irrelevant.

Bookmark the permalink.

4 Responses to Startups shouldn’t pursue patents

  1. prasad mhatre says:

    great article…

  2. shrinivas Joshi says:

    Great article.

    Pandit

  3. Atul says:

    Excellent job, Anil. Do you think it might add value to show who can/should pursue patents? Also, real world examples of how patents are exploited primarily by cash rich companies (read pharma), or how even cash rich companies fail (Apple v/s Samsung) … a game that most of the startups are just not equipped to play.

Leave a Reply

Your email address will not be published. Required fields are marked *

  • Ad