As we’ve talked about the #1 bad reason why startups should file patents, let’s take a look at the second worst reason:
“Startups should file patents because they can create licensing revenue”
Also this reason is fine from an academic viewpoint. Patents are business assets just like physical objects. They can be bought and sold, exchanged, or “rented out”, i.e. the patent owner may allow third-parties to use the patented technology in return for a license fee.
Doesn’t it sound appealing that you could collect a passive income stream off of your invention?
The reality, however, is that you will not be able to play the licensing game as an early-stage startup.
This is because your competitors will not throw money at you simply because you have a patent.
Successfully licensing a patent portfolio requires you
- to track your competitors and their products,
- to convince them that they need your technology, and
- to negotiate licensing agreements.
This is actually an art in itself and requires a serious amount of expertise, effort and time. Resources you don’t have in your startup, especially in its early stages. Because you should be building your product.
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By the way, check out my little Youtube channel for even more quick tips on patents for startups!
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So, when you consider filing patents for your startup, don’t do it because you think you can actively enforce them against your competitors, or license out your technology on a large scale.
Do it for the right reasons. And I will tell you about these in the next post (sorry for the cliffhanger 😉 ).
In the meantime, let’s get some discussion going: What’s your take on patents for startups? What are your pros and cons? Let me know in the comments!
Originally published at www.europeansoftwarepatents.com on March 16, 2017.
P.S.: This was just the tip of the iceberg. If you want more, get on my email list. I usually write an update every two weeks or so – it features inside knowledge and practical tips on European software patents. You can subscribe here.