Assuming your idea is patentable, there are critical things to ponder when deciding if you should invest the tremendous sums of money patent registration – and enforcement – requires. An established company has the resources to evaluate its markets and customers. Moreover, they have existing distribution channels that startups lack. Although many claim it is wise to register for a patent to deter imitators, the truth is that large companies regularly prevail when challenged in court. Therefore, a patent’s value as a sword or shield is debatable.
For bootstrapping tech startups, there are alternative, cost-effective routes that can provide relatively robust intellectual property (IP) protection. Confidentiality agreements and trade secret protection can work just as well as costly patent registration, especially when combined with exceptional innovation design and speed. All employees, board members and advisors should be required to sign agreements obligating them to assign all business-related IP to the startup. You will also want to extend IP protection through agreements with non-employees, including vendors. outsourced designers, consultants, engineers, and even customers.
With all of that said, patents can offer a tech startup many benefits. It can attract investors and deter some competitors. After all, investors like to know that your business idea has something to hang its hat on. A startup with patent protection becomes more valuable to companies interested in forming a joint venture or making an acquisition as well. A startup has the ability to license its patent and, which gives the company another option to generate funding while expanding its market simultaneously.
In order to address the high costs, mounting litigation and general burdens associated with patent registration, the America Invents Act (AIA) was signed into law in September 2012. The AIA is the most noteworthy change to U.S. Patent law in close to 60 years. Significantly, the law changed U.S. patent rights from first-to-invent to first-to-file for applications filed on or after March 16, 2013. The new law also expanded the definition of“prior art,” which really helps first-to-file patent applicants. This law can be a game-changer for tech startups. Whether your IP assets are assets that should be protected with patent registration or with other strategies can best be determined with the assistance of an experienced IP attorney.