Handling Patents as a StartUp
This article is based on experiences with European jurisdiction. In the US, patent matters are slightly different. This article does not constitute legal advice.
As a software or AI startup, your Intellectual Property (IP) is your product. Your business boils down to selling brainwork, which is exactly as it sounds: very intangible. Patents are a great asset when approaching investors. They show that you have something no one else has. In a world of untouchable values, a patent acts as a manifestation of your intellectual effort. On the other hand: How do you know no one else has done this yet? How do you know you’re not violating patents? For this, you need an FTO.
Considering Patents
“It would be a great signal for our investors if we had patents”.
I don’t want to give you illusions: Experienced investors know about the value a patent holds, but also about the effort that goes into obtaining it. Therefore, it might even be a bad signal, if a startup spends time and money on something that does not provide any real advantage over the competition. From this perspective, you can see patents as a luxury. Focus on the groundwork first before building skyscrapers.
FTO
FTO stands for Freedom-To-Operate (analysis). It entails checking whether any of your inventions is conflicting with any granted patent or patent application. In short: You’re looking for reasons a competitor could sue you.
When we were asking patent lawyers for an FTO analysis and for their experiences with startups, not many had any references. The reason is simple: startups don’t have the time and money to take care of this. Big companies even have separate departments for this purpose and can afford to screen the patent landscape before entering a market.
Time & Effort
This is the most difficult aspect of patent analysis. You’ll not know how much there’s to do until you’ve started. Also, you can choose whether you want to leave everything to an attorney and spend a fortune or if you’d like to do it yourself — saving a lot of money and being at risk of an incomplete analysis. Though the latter is not entirely true. You’re very likely the one knowing best about your own business and competitors.
The Attorney
Without any doubt, you need an attorney. Not only will the attorney provide you with knowledge about how to conduct the research, but will also give you a written confirmation that you’re not infringing any patents — which is a great signal for investors.
Most of the patent attorneys we came across were physicists with a doctor’s degree. We’ve also found an IT specialist. It seems counterintuitive to have a physicist handle your software architecture, but in the end, it’s more about understanding patents than understanding software. It’s about the language spoken in the patent space and that’s the resource to obtain from such an attorney. Don’t try to make the attorney understand your product inside-out. One hour of their time costs between 300 and 500€. It’s easier to get an education on how to screen patents than to educate the attorney about your product and your future plans.
I would recommend involving your (machine learning) engineer in the process because it will get very abstract and technical.
The Research
There are several websites out there where you can inspect the patent landscape for free:
Should I File a (Software) Patent?
It’s not so easy to file a software patent.
The process can take up to several years. Especially for software patents, this is simply too long as the product will be outdated by then.
It acts more like insurance than anything else. You’ll probably never sue anyone.
Deliberating what to patent, startups are likely to fall for anything they just invented. Instead, they are better advised by filing a patent for what is most crucial for their business in the long run. And indeed it is a long run from filing a patent until it is granted.
Alternative Assets
There are other possibilities to protect your assets. But first: what are your assets?
As a software startup, you need a digital audience. This is your asset. Maybe you have a monthly newsletter. Your subscribers are your assets.
Your brand could also be an asset. To protect your name and designs. Identify possible target markets and also protect them there.
Go and get domains that might be confused for your actual domain. Get domains that are remotely related to the things you do. Get mostly .com domains if you can.
Build up high google rankings. This is very important for local businesses, but it also sends a signal to customers and potential new hires.
Understand your customers: having a way to obtain intelligence about what they want and having a way to communicate back at them, that’s a real asset.
Appreciate your team. Nothing without a team. Protect your team, educate your team, give them responsibility and a purpose.
Another way to protect your assets is through copyrights and trade secret laws. Put a copyright notice on your assets and establish a confidentiality policy for your trade secrets in your company. In the end, the best protection is not tell your secrets. ;-)
