Protecting a new business idea, whether tangible or intangible, can be a source of confusion to many business owners. Majority don’t know how, why, and when. Still, many small business owners and entrepreneurs typically don’t see any reason why they should go to great lengths to keep their products or innovations a “secret.”
It’s a completely different story for tech companies, particularly startups, mainly because, as a firm that predominantly relies on computers and the Internet, ideas and products are always available to the public. Keeping these valuable and unique ideas, products, and services safe and away from competitors are part of a startup’s survival.
Indeed, in this digital age, it can be a bit tricky to protect your well-thought-out inventions. However this is where a patent strategy may come in handy.
A startup is usually engaged in innovative ideas to resolve consumers’ critical pain points. As a recently-established business entity they aim to develop revolutionary products or services to the market. Most, if not all, startups operate on a meager budget. Often they are also on the lookout for financial backing from potential lenders or investors. Whether this be from venture capitalists or angel investors.
In order to receive financial backing, a startup must embark on specific and effective strategies to prove to the lenders or investors that their concept is indeed valuable and unique.
By definition, intellectual property (IP) refers to an ownership of an intangible creation of the human intellect or the human mind. It can include an invention, a design, a brand name, literary and artistic works, as well as names, images, and symbols used in commerce. IP rights protect these intangible assets and brand value that, like other forms of property, can be sold, licensed, and mortgage against. These strategies help protect your intellectual property in the right ways.
A copyright is a form of intellectual property, with rights vested to the creator of an original work. Thereby allowing the creator to choose how these creations are made available to the public. Meanwhile, a patent is a form of industrial property that protects inventions, which can include new and useful products, services, and process innovations.
Comparatively, it’s harder to obtain a patent than a copyright, because in order to earn a patent, the invention must be useful, fresh, and non-obvious. This makes expert patent protection imperative for startups.
The time, effort, and money spent for research and development takes a huge chunk off the operational budget, and you can’t let these painstaking activities go to waste. By securing a patent, your rivals won’t be able to steal the idea and processes away from you. It does not need a working model in order to be granted.
It not uncommon to see startups proposing to innovate an existing technology, making them susceptible to lawsuits from the large companies where the technology in question originates from. These large companies will instinctively block any forms of technology use, spelling doom for small businesses that would have introduced improvements. Startups with patented technology could defend themselves in such situations by counter-suing or negotiating.
It always helps an entrepreneur to think big. By securing patent protection, a startup can prevent its rivals from exploiting the product or technology it worked so hard to develop. This can help startups build its reputation as well as establish its foothold in the market. Additionally remember is that a patent right can be flexed even before a competitor enters the market.
A unique and innovative product or service is highly attractive to investors. It has the power to convince lenders to inject fresh capital to a startup. Patent protection can further offer certainty of repayment or return on investments (ROI) to these third parties.
Intellectual property assets contribute positively to a higher financial value of a company. As a startup grows exponentially enough to participate in the stock market, it can offer shares to the public for a higher price. This means more money for business expansion.
Collaborations between large tech companies and small startups happen in some cases, the aim of which is to harness each other’s technology to come up with something revolutionary. A patent-wielding startup is protected from exploitation by large tech companies in this instance.
Patent owners may consider third-party use of their invention in exchange for fees and royalties. This is useful when you don't have enough capital and facilities to manufacture a product or penetrate the market.
In cases where a startup faces challenges and is no longer able to advance, a merger may be a good idea. As IP assets, including a patent, can increase the value of a startup company, or any company for that matter, the chances of attracting a larger company to acquire it, are higher.
If you’ve just opened a startup, you may want to read this guide on the common startup mistakes to avoid if you want your business to succeed.
There’s no doubt that patent protection can benefit startups for various reasons, as stated above. But before deciding whether to get one for your product or service, consider the following points:
Protecting your business can be very challenging, especially since information is widely accessible more than ever. Always consider intellectual property as a worthwhile investment. Remember which you can use or make money from even after your startup business fails to perform as expected.
Because of the benefits it can bring to specific businesses banking on inventions and innovations, the acquisition of patent protection should be considered or even incorporated in a startup’s business plan.