Ultimate Benefits of Patents for Technology Startups
Do you have an amazing idea? Or experimented with a neat little prototype around an innovative concept. Are you excited about its release?
Hold your horses! You are first required to preserve your Intellectual Property (IP).
It takes years of hard work and dedication to develop software. However, once its features are well-defined, it becomes easier for others to replicate the software using a separate language or a platform. Software copyright can only protect the replication of the software code. However, if an identical software code is independently developed, the copyright does not provide any protection for the same. Also, it does not safeguard the delicacy of the idea, core processor the functional aspects of the software.
This is where “Patents” come into play.
Patents play a pivotal role in determining software and process protection. It adds significant value to the success of smbs and startups, particularly Technology startups. Patents offer exclusive rights to the owner, thereby preventing others from making, selling, distributing, or selling the patented invention without permission. The Bright Side of Patents provides an insight on how patents can benefit the Startup. This published working paper shows how the patents assist the start-ups to become more innovative to reap maximum benefits. A study has found that patent approvals assist startups to innovate, grow their sales, create jobs, and succeed. For a tech startup, the patenting cost might seem a significant expense but it can prove to be an asset in several ways as there are so many amazing patent searching tools and techniques. Below are the ways by which software patents benefit technology startups.
Preventing Competitors from Exercising any Right to Your Property
Patents prevent the competitors to exercise the rights that are granted to the patent owner. The threat of patent litigation is expensive and considered very serious. It can sometimes run into a million dollars. It acts as a deterrent to the competitors who perceive a constant fear of patent infringement. Even though the patent is neither making a profit nor boosting your company’s brand persona, however, provides the freedom to operate your startup by averting the potential competitors from emulating the patented software or the product. Needless to say, a properly patented technology, business method, or service can offer a great competitive edge to the startup, a trademark to the company’s success.
Helps in Attracting the Investment
Sometimes the start-up company’s valuation is based on the value of the patents that safeguard its key technology. A patented software product or business method gives you an advantage during the evaluations conducted by venture capital investment companies. A good patent portfolio helps in attracting investment. Valuation of start-up companies is often based primarily on the value of the patents that protect the key technology areas of the company. A patent, patent search, or even a patent application gives you an advantage in the market and can, therefore, give the company an edge during evaluation by venture capitalists.
Helps in attracting a Partnership
In a scenario, where access to third-party technology is needed, patents can become very useful as it aids in demonstrating the technological leadership and credibility of the startup company. It is an essential factor to boost the product or a company’s image. Further, it offers a strategic edge by enhancing the negotiation positions for cross-licensing, contracts, deeds, and various collaborative deals.
Ability to Generate Licensing Revenues
One of the key benefits of Patent for Tech Start-ups is the ability to generate Licensing Revenues. The patent owner can easily permit the license to another party to grant the licensee to use the patent rights without violating the claims of the patent. This is very true in the case of patents on breakthrough technologies, where several competitors have the requirement for the patented technology so that they can enhance their products. Besides monetizing the patents using licensing, the patents can easily generate revenue through the damages and the settlement that are won through the patent litigation process.
If you are one of the Startup Companies, Consider this:
The delay in your patent application process and application rejections will lead to negative consequences. For every delayed patent application, the employment growth of the startup decreases by 21%. If the same continues for 5 years, the sales graph is bound to decrease by 28%. Not only this, with delayed patent application every year, the average patent granted decreased by 14%, and its quality by 7% decreased. With each year’s delay, the prospect of the startup to the public is reduced by half. This is the reason why tech startups that offer services and products like big data services, cloud computing, and online project management tools are required to get fully patented before getting completely live for end-user from its Beta Version.
Patents are considered as the monopoly grants that hold up for the time interval of 20 years. During this tenure, no one other than the patent holder is allowed to make use of the technology which is incorporated in the patent’s claim. Needless to say, patents are among key components of a technology company’s IP portfolio. The patent Portfolio of your company opens the gateway for various investment possibilities from venture capitalists and investors. By licensing out the patented software, product, or technology to third parties, startups can use the patent portfolio as ROI. Not to forget, protecting and investing in the IP assets is the key to providing investor comfort, generating potential revenues, and building business credibility for the startups.