Patents are a necessary addition to any budding company. And they can be a valuable intangible asset, significantly increasing your business’s value. And while this alone may make you feel like you’ve got what it takes to make it on your own, a significant sum from a curious venture capitalist can go a long way.

But attracting investors is not always easy. That’s why, with the help of a qualified patent agent, Spencer Keller from Trademarkia, we’ll look at patents in-depth and get the inside scoop on how patents have built the success of business owners today. Let’s get to it!

Starting Off: The 3 Undeniable Benefits of Patents

While I hope that I’ve successfully “sold” the idea of getting patent protection to you, I’d be shortsighted if I didn’t go over the myriad of advantages there are to protecting your inventions:

• A legal monopoly: While the term monopoly has become synonymous with greedy corporations attempting to manipulate the market, this is hardly the case here. Instead, patents offer you a “monopoly” on your invention’s sale, use, production, distribution, import, and export. 

• Improved credibility: Having a patent can do wonders for the credibility of your business. This alone can drive your chances of venture capital investments.
• Increased market share: patents in and of themselves are valuable and can increase your company’s market share. As you can imagine, this is likely to attract investors. 

But that’s just a summary. Patent agent Spencer Keller had this to say about the benefits of patents:

“One benefit of making that initial investment is you can claim “patent pending” while your application is pending with the USPTO. This little phrase can be very valuable because it gives your brand credibility, and like mentioned above (but to a lesser extent) it tells investors and consumers alike that you mean business and will spend the time and money required to move your business forward.”

A Specialist’s Perspective: How Patents Bring Prosperity

Patent agent Spencer Keller had further thoughts on the undeniable benefits that patents have for businesses, here’s what he had to say:

“Patent protection is an extremely valuable tool that benefits holders in several ways. In our first to file system, a patent holder receives protection until at least the 20th anniversary of filing. That exclusivity over that time frame can be very lucrative.

 Patent evergreening and other mechanisms can extend a patent’s lifespan, but such techniques are typically reserved for large entities with deep pockets. Often, especially for small or micro entities, this monopoly is not where a patent’s value arises.

The most underrated and unknown benefit of patent ownership, especially for small entities or startups, is the increased likelihood of receiving venture capital investments.

Owning a patent exponentially increases the chances that a startup will receive venture capital investments, with studies showing that a startup or small business with a patent is anywhere from 50% to 87% more likely to receive venture capital than a business without a patent. The reasoning behind this is simple:

Patent ownership shows investors the business, well, means business. Becoming a patent owner (or assignee) takes time and money. If a business spends the time and money required to see a patent application to allowance, the business must have a clear vision and something novel that no one else can make. Furthermore, patents are an asset. Venture capitalists want assets to fall back on if the startup or business goes under.”

Oops! Kodak’s Almost Billion-Dollar Mistake

Did you know that Polaroid sued Kodak for patent infringement? It’s true! Here’s what happened:

Kodak, back in the 1970s, developed an instant film technology similar to Polaroid’s, which had patent protection. And instead of requesting a licensing agreement, Kodak opted to begin sales. So, as it goes, Polaroid took a stance and sued the tech company.

In 1991, after a lengthy legal battle, Kodak agreed to pay Polaroid a whopping $925 million in damages.

This case emphasizes the importance of patent protection. It’s clear that Polaroid was able to protect their original invention, although it took many years to do. 

Patent agent Spencer Keller shares his thoughts on the matter:

“This famous patent case is just one extremely lucrative example in a sea of patent cases demonstrating a patent’s value. One of my favorite professors in law school always told us, “it only takes one good patent.”

My favorite patent story is captured in the Hollywood film “Flash of Genius.” This film tells the story of Robert Kearns, an everyday guy who invents and patents the intermittent windshield wiper in the 1960s. Ford Motor Company and Chrysler Corporation both steal his invention and are ultimately forced to pay Kearns a combined $28.8 million.”

When To Hold Off On Getting a Patent

Venture capitalists love startups that look like they’re about to shift the market significantly. Think about these wealthy investors as strategic risk-takers, trying to determine where they should invest their wealth.

And while they’re unlikely to put all their eggs in one basket, they’re still unlikely to invest if they sense you don’t have a clear direction. That said, Patent agent Spencer Keller recommends that startups hold off on getting full patent protection in some situations:

“If you are prototyping and your final product may be way different than what you currently have waiting, or filing a provisional patent may be warranted. Provisional patents are essentially one-year place holders that establish a first filing date (called a priority date) with the USPTO. If the invention drastically changes from the provisional patent, then only the portions of the new model that overlap with the provisional patent will have the priority date. 

Provisional patents can also give a business a chance to test the market with their invention without risking someone else stealing their invention and/or losing their rights. Typically a provisional patent is less expensive than a full, non provisional patent, but their protections and rights are less valuable.”

A Step in the Right Direction 

As we’ve gone over, patent protection is crucial for ambitious startups because it offers them that added “oomph” they need to reach their goals. And with the backing of a savvy investor, your business has that much more opportunity to see great highs. 

Author Bio:

Joshua Julien Brouard

Joshua Julien Brouard serves as the editor at Trademarkia, a prominent legal tech enterprise. In addition to maintaining the company’s high-quality blog content, he focuses on the coverage of intellectual property updates, collaborating with diverse patent and trademark attorneys across the globe. He holds a Bachelor of Commerce degree with a distinguished major in law. Feel free to engage with Joshua through LinkedIn or reach out via email at joshua@trademarkia.com for further connections.