Patents aren’t cheap, but they are important. Besides the time and effort, it will cost you somewhere between $5K-$15K per patent. As a startup you ‘ll need to worry about a patent portfolio that provides you with real value besides the obvious one - responding to a VC’s query about the IP protection you have, barriers to entry etc. So how do you go about creating a patent portfolio? Here are some of the considerations you should take into account when deciding what to patent:

• Freedom of action - what is key to making sure that you can build the products you need to be successful, without anyone being able to stop you.

• Leverage for partnering - allows you to provide unqiue partnership value that (hoepfully) people are willing to pay for. And it is cool to say “patent pending technology”.

• Block competition - keep others from doing the same thing. But don’t really count on this, since this is usually relatively hard. Given that there is usually more than one way to do things - how do you tell if a competitor is actually using your IP without a costly trial.

• Due diligence and M&A - worst comes to worst, you can sell your IP portfolio. However, this is really a last resort since patents without skills are usually not considered all that valuable as an acquisition. However some key patents can  increase your value in an acquisition.
• Generate revenue (and especially profit) - this actually a possible, but very difficult, business model to implement (e.g. Qualcomm as an example). Be honest with yourself - what are the chances that someone will pay big bucks for access to your patent portfolio….

The basic steps in creating your patent are:

• Invention - Discovering something that is unique and valuable and then deciding which parts are worthy of the time and effort of a patent.

• Competitive Analysis - Should be done by the inventor, rather than attorney, since the inventors understand the domain better than anyone. You can find helpful resources at http://www.uspto.gov/ and http://www.google.com/patents.

• Provisional Patent -doesn’t really provide protection, buty does allow you to set a date of inventtion. For the few hundred bucks it costs, it is usually worth it. In your provisional patent you should document as much as you can about the invention. Don’t forget you only have a year to submit the actual patent - don’t wait until the last minute.

• Write patent  - Expect to spend significant time writing, explaining and reviewing.

• Submit and wait - and decide where you would like to submit.

• Modifications - the patent office will probably come back with questions and issues (though not quickily, it can take a couple of years for a patent to be reviewed)..

Stumble it!

This entry was posted on Friday, July 20th, 2007 at 12:26 pm and is filed under Aquisition, IP, Israel, M&A, Patent, Startups, VC, Venture Capital, strategic. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.