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Why startups should not file patents! 

Updated: Feb 16, 2020

Patent is a buzzword amongst tech startups. Yes, that is one asset that every startup owner and even the investors look forward to. And rightly so. A patent, apart from being the strongest evidence of technological ingenuity, also serves many other fruitful purposes including, but not limited to, investor confidence, protection against unauthorized free-riding by competitors, and more recently eligibility for various government schemes/incentives (Startup Orissa monthly endowment scheme).

Theoretically speaking, a patent is the only way a startup might stand up against a big corporate giant. Practically speaking, patents give visibility to small startups in eyes of bigger sharks, who may ultimately acquire them, subject to the product lines being complementary or competitive. In fact, the latter is the dream of many startup founders I have met, i. e to get acquired by a bigger company, thereby assuring a profitable exit for investors and founders. So, everything sounds wonderful. Let's find out a patent attorney and get this patent moving. Right?

I am afraid, that's not the entire picture. Of course, that's a lovely picture but only cinematic, not realistic in true sense. Why am I cautioning against the biggest sought after asset in the era of industrial revolution 4.0? Are the people who are progressively and sometimes aggressively projecting patents as one of the main drivers of growth, up to spreading misinformation?

NO, my friend. They are correct in their judgment and vision. However, as a startup founder, you need to have a clearer picture. So what's the true picture?

The true picture is Startups should not file patents..... unless they are sure of what exactly is being claimed in the patent and whether the patented invention could be commercialized, and most importantly detected for infringement. Sounds complicated? Let's simplify.

Patents are beneficial only when the claims of the patent application completely reads on your products/solutions. When I say products/solutions, that is what you sell or intend to sell. Many a time, startup owners approach us for filing a patent on their product/solutions. However, we have to explain to them that they should not file one. It's critical to understand the difference between a good patent and an unnecessary patent. It's more important to understand the difference between filing a patent and getting a grant on a patent that covers their product/solutions.

Generally, it is seen that once patentability is done, patent consultants recommend design around ideas to make sure the invention steers clear of the prior art. This, my friend, is the death of your idea. There could be two scenarios in case of filing a patent without a good review/opinion: One, that you file the patent application and during the office action, prior arts reading on your claimed idea is cited. You end up spending around more than a lakh rupees till this stage, only to find out that your idea is already present in the public domain. Second, your attorney amends the claims by adding features to star clear from the cited prior arts. You might get a grant and continue paying the renewal fees for the entire 20 years term which precisely comes up to around 3 lakhs plus another 1 lakh for drafting and prosecution of the patent. Ironically, the grant that you have is worth no more than a piece of paper since by amending the claims to introduce additional features, you have gone out of the scope of your product/solution. So you might have a granted patent but that might not cover your product and will not save you from infringement by others. I am not even considering the litigation expenses that you would incur only to find out that your patent is worthless. Here are few points that one must ponder over before deciding :

1. Check with a Patent Attorney if your invention is patentable and get an opinion - Howsoever trivial this might seem, but this is the most fundamental step. As a matter of fact we, at DreamNext Consulting, offer Brutally Honest Review, for disclosures submitted by the startup to us. If your disclosure passes our review, we draft and file your patent application for absolutely no additional charge. We don't draft patent applications unless we are convinced of the same.

2. Read the draft written by your Attorney - Sounds basic but very important. We have seen that many times founders are so busy with their other business commitments that they do not spend time reading the draft, and the same is ultimately filed. This again leads to garbage patents. One confounder we discussed with said that he tried reviewing a patent draft but gave up after sometime since the language was very difficult to grasp. This is a caution. Please understand that is you, as an inventor, are not able to understand the meaning of claims of your own application, very good chances exist that neither will the judge adjudicating your infringement proceedings will. A good patent is always easiest to understand, at the same time difficult to write. A simple language is good language.

3. Patents come at a cost- Like all other business assets, patents come at a cost. You should be prepared and make a provision for patent costs. Its very simple, you get what you pay for. Do not ever waste your resources, both time and money, looking out for cheap and low-cost vendors. It's your asset. You will be spending another 2-3 lakhs just on the renewal fees. So don't get into that trap of cost savings. That would ultimately cost you more than 4-5 times. A blunt and honest advice would be don't file a patent if you can't afford it. It might sound rude and harsh, but that's the fact. No one would want an infested house even if it is offered at half the cost, for the very simple reason that you would end up spending a lot more on the maintenance part. The same applies with patents. You can get hold of vendors offering patent drafting and filing for as little as 20000 INR. Yes, that true. But be cautious while handing over your researched idea. Another point that inventors should be wary of is once the patent is filed, there is no scope of amendments. Once a mistake is done, in the context of technological understanding, the same cannot be corrected. Even if you file a new application, your own application would act as prior art.

Here's the math. A good quality patent draft takes roughly about 40-50 hours of work. Add another 10 hours for prior art search and 2 hours for filings documentation. Let's take the least 52 hours. I will leave the next part of the judgement for the readers.

Its simple to understand that business can be successful, without patents, based on great marketing campaigns, excellent customer service, and market fit product /solution. Whenever you decide to go for a patent, please justify the same to yourself before taking a call. By simply following the above steps, and deciding not to file a patent is going to save you 3-4 lakhs INR. Multiply that by the number of patents, you wish to apply for.

Brutally Honest Review: How does this work?

It might intrigue some people as to why someone would draft our patents at no cost. It's simple, we charge a fixed fee for the Brutally Honest Review. We make up for the loss incurred by the trust gained at the end of the process. Further, this is why we started our consultancy. To help the Startups save their hard-earned money on unnecessary filings. We will not draft/ file patent applications for anything thrown at us, which includes a few recent examples of a grocery delivery app, a method of the employee appraisal process, a unique game developed or a news aggregator. Without any disrespect to inventors of the above-mentioned ideas, we humbly denied working on them, since these ideas did not pass the brutally honest review. The inventors were surprisingly pleased with the outcomes, once we explained how not filing those ideas would save them lakhs. Brutally Honest Review, not only tackles prior art issues but also whether the idea has a good chance as a patentable invention. Next time, you approach a Patent Attorney, be mindful of the above facts, and moreover be very sure as to why you need a patent, for highlighting on your resume/LinkedIn profile or as a business asset.

Keep following the blog for more perspectives...

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