The Startup Patent Dilemma

"I need a patent to get investment, but I need investment to get a patent!"

This is something I hear quite frequently when I meet people involved with very early stage technology businesses, or those with aspirations to start a business.

My first response is usually to commend them on the fact that they are considering an intellectual property (IP) strategy at this point. As many readers will know, patents are time-sensitive. Most jurisdictions, and all the popular ones, now grant patents on a "first-to-file" basis, rather than "first-to-invent". This means the first one to file a patent application to an invention is the one able to get full patent protection. Therefore, early consideration of patentable IP can be decisive.

My second response is usually to reassure the business that, even if they do not have a patent, the right investors, i.e. those willing to take on the risk of a brand new business, might in fact take more confidence from a well thought out IP strategy than a pending patent application with an unknown fate. That said, having a well written patent application on file, if appropriate, will certainly help.

If filing patents is deemed to be critical or highly valuable to a business, then this should be prioritised appropriately. In my experience, most early stage businesses can find, and/or direct, the required resources for this activity, if there is justification within the business plan for doing so. However, it is still important to maximise value for money and ensure patent filing costs are affordable.

Very rarely is there a one-to-one correlation between patent and product. Patents protect inventions, and inventions are new technical solutions to existing problems. More often than not, a number of problems, interrelated or otherwise, are overcome when developing a new product. Although, it is often advantageous to include everything in a first patent filing, the law of diminishing returns does apply. Identifying the highest value patentable aspect or aspects, and limiting a patent application to these, will help maximise value for money.

There are two distinct parts of a patent application, namely the claims and the description. The claims define the monopoly that will be conferred to the patent owner. The description primarily supports the claims by disclosing how they can be put into practise. This is the fundamental patent trade-off - monopoly for disclosure. However, the description usually serves an additional function as a reservoir of further details and features, the inclusion of which might increase the likelihood of the patent being granted.

Drafting claims is the more subtle exercise, requiring the most thought, care and experience, and generating the most value. The patent trade-off requires certain minimum requirements to be met by the description, but the rest is somewhat discretionary. Disciplined drafting, to keep the description slim, can also help maximise value for money.

In some cases, for example when inventors have past experience of filing patent applications, writing academic papers or grant applications, details about the invention provided by the inventors can be used in the description without too much alteration by the patent attorney. Provided that any deficiencies from the ideal patent application are understood by the applicant, then costs can be further reduced in this way, if required.

In my experience, "I need a patent to get investment, but I need investment to get a patent!" is largely a misconception, on both counts.