In today’s crowded market, it is important to create a business strategy for your start-up or small business that will set you apart. Patents are one key way to do so.
As an entrepreneur, you can use patents to signal to investors, customers, and key stakeholders that your company offers a unique solution, product, or design. Patents can also provide you market exclusivity that bars competitors from encroaching on your idea. The benefits of patent protection are numerous and far-reaching, and must not be overlooked when starting a business.
What is a patent?
Patents grant an exclusive right to their owners for a limited time on the claimed subject matter disclosed in their issued patent. They are a powerful form of intellectual property protection.
The purpose of a patent is to provide protection to an inventor with the necessary time and space to make, use and sell his or her invention without the threat of competition.
However, keep in mind that the process towards obtaining patent protection can be costly, time-consuming, and confusing. The first steps in mitigating these negatives are knowing the process, hiring an attorney, and filing your patent application correctly.
Getting Started: Considerations and First Steps
When calculating the cost of investing in patent protection, items to take into consideration are your time; your attorney’s time; and the fee to file an application with the US Patent and Trademark Office.
After hiring a USPTO licensed patent attorney, the first step is conducting research. A thorough patentability analysis will help you examine whether what you’ve invented is patentable, whether something identical already exists, or if a patent is right for your specific product.
The next step is to file either a provisional or non-provisional patent application. The key difference between the two is that while a non-provisional patent application is reviewed for eligibility and the listed invention can eventually become patent protected, a provisional application never gets examined and never matures into a patent. The upside to obtaining a provisional patent is that it acts as a placeholder and grants you a one-year period to file a non-provisional application.
Which patent application should you file? This depends on your invention, which stage of research and development you are in, and how established you are as a company.
Provisional applications are best for technology that is still under development or technology that a company wants to test commercially prior to obtaining full patent protection. Most new companies file under the provisional application system first.
JD Houvener, founder and CEO of Bold Patents advises that “For more high-tech and cutting edge inventions that are in the later stage of R&D, companies will want to file a non-provisional patent application (utility patent) to obtain a full range of rights as soon as possible.”
Patent Upside #1: Exclusivity
The first upside is that a patent provides you with an instant market share for up to twenty years. Throughout this period, you will retain the right to be the sole player in the market with the ability to make, use or sell your claimed patent asset. This can be a huge change maker, especially if you are just starting out as a small business or start-up.
Having the exclusivity of a patent over your idea, product or invention is an incredible way to generate profits. This exclusivity allows you and your company to price your product or service with plenty of margin for profit, as there will literally be no competition.
Patent Upside #2: Revenue
Another benefit to patent protection is seen once you have legal ownership over your property via the patent. Post-grant, you gain the ability to transfer, license, or sell your patent, just like you would a real estate property.
This unique ability allows you to play within a bigger realm, by giving you the chance to monetize your idea without having to do any work yourself. This provides an easy way to profit on your idea. A steady stream of revenue for a fledgling start-up or founder-owned (rather than venture-backed) business can be a major upside.
Patent Upside #3: Momentum
One of the biggest pros of obtaining patents is that a robust patent portfolio is an asset that makes it easier to demonstrate tangible value for a company. This value makes it easier for potential investors, partners, or shareholders to see your company as a worthwhile investment in their time and money that will be likely to generate returns.
By gaining traction, users, and investments, your new business can obtain a level of seriousness and credibility that signals to the marketplace that you are to be taken seriously.
Patent Upside #4: Perfecting Your Pitch
For start-ups seeking venture funding, patents provide value because the application process forces you to learn your product inside and out. When filing your patent application, you will likely have to go through a drawing and a claim-writing process. You will have to describe your invention through a numbered set of claims and if it is a physical article of manufacture, you will have to create flow charts, high-level summaries, and systematic diagrams.
These items can later be used in your pitch decks, along with a well-articulated understanding of what it is you are pitching.
Despite the initial costs of your time and money, there are enormous financial upsides to obtaining patent protection on your new product, idea, or design that can’t be overlooked.
