Tuesday, July 27, 2010

Why startups have lousy patents.

After helping several startups strengthen their IP, I feel like writing down some of the key problems they face in developing good patents.

1. Lack of funds for legal work.
Patent filing and prosecution is expensive. Legal costs can run into tens of thousands of dollars over 2-3 years. Most startups prefer spending this money on product development.

2. Individual invention vs portfolio focus.
This is related to problem 1. Due to lack of funds, startups try to file just one or two patents on what they consider to be their core inventions. As the initial technology approach and target market shift over time, original filings become useless.

3. Lack of inventive skills to develop long-term value.
Engineers are not trained to invent. Most often, their inventions are side effects of either routine engineering work or inefficient brainstorming sessions. Systematic approach to developing long-term ideas is largely non-existent, therefore patents are not aligned with business models and don't cover critical business/technology control points.

4. Lack of patent knowledge.
Engineers and entrepreneurs lack good working knowledge of the patent system. They have hard time understanding claims for their own inventions and can't evaluate quality of legal work. As the patent prosecution process stretches over several years, focus shifts to just getting a patent, with little regard for its quality.

5. Short-term implementation focus.
Relates to 2 and 3. The time horizon of a startup is driven by implementation milestones, which are spaced between 3 to 6 months. Two to five years is considered to be extremely long-term, therefore people don't even think what's going to happen after that time. In contrast, a patent's lifespan is 20 years from the day of filing. You need to be extremely lucky to get a good patent if you've got a 2-5 years technology horizon.

Each of these problems is a killer. So just spending money on patents, i.e. addressing the problem number 1, doesn't guarantee creation of a high quality portfolio. A great deal of IP value is lost due to poor inventive skills and short-sighted patent strategies. I am glad I've been able to help my clients to overcome these issues.

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