Value of Patents to Start Ups

Start ups are famous for carefully deciding where to spend their capital. Investments in research & development, marketing, customer acquisition and other expenses can quickly add up, leaving patent protection as the odd man out. One complication is that patents are critical for any legitimate, innovative, tech-based start up – but the rate of return on a patent is almost impossible to calculate. Much of patent protection relates to perception from investors and competitors. Of course, start ups can also obtain significant capital by enforcing their patents, or licensing them to companies with better distribution channels as Invent Help experts say.

Keeping competitors away

A patent grants the right to exclude others from making, using, selling, or offering for sale the patented invention. Patents carve out the area of technology that the start up created, meaning it has a limited monopoly on that technology. Competitors recognize this and keep their distance, or move in a completely new direction.

Value to investors

As a general point, I’ve always believed a successful start up has at least one of two qualities: (1) the start up is extremely well funded, or (2) the start up created something wonderfully innovative. Most start ups do NOT fall in to category (1), and legitimately believe they fall in category (2). The obvious point, then, is that a start up should protect its critical innovations and provide a barrier to competition. Otherwise, larger companies with greater resources could easily take the innovation and sell it through their greater sales channels.

Investors believe in patents. I’ve personally witnessed a company denied funding because they did not protect their innovations through patents. On the other side, I’ve seen investors wowed by patent portfolios that covered major details of a start up’s creation. If you are a start up in category (2) – that is, you’ve innovated a product but are not extremely well funded, then an investor is looking for tangible reasons why your innovations are proprietary. Simply saying an invention is proprietary does not make it so, and trade secret protection is weaker than some may believe.

If you truly believed you’ve invented something, and you want to capitalize on that invention, both competitors and investors will take you more seriously with effective patent protection as stated on this Invent Help review. The value of such intellectual property is difficult to quantify with precision, but the lack of protection can many times be fatal to a start up.

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