The Role of Patents in Startups

The implementation of the America Invents Act has been the catalyst for increasing media discussion about the role of patents in the US business innovation cycle. Patents clearly play a large role for big companies in many life science and high tech industries, but what role do they play for research based startups and how important are they to those companies?

University based startups typically have the benefit of patent applications filed by the university. The university staffs often has access to sophisticated professionals and seek the broadest protection possible so the patent applications and issued patents may be stronger than a typical startup formed by an inexperienced entrepreneur.

Unfortunately many startups, including university spinouts, don’t develop effective patent strategies to build on the licensed portfolio. Many startups fail to file additional patents in their first years of operations while faced with limited budgets. With the new “first to file” rules these startups face greater risk of losing critical protection.

In some other cases startups embark on a poorly conceived patent filing strategy and file numerous US and foreign applications. While many patent cost can be deferred, the startup can find themselves faced with rapidly growing bills in a few years. Often the startup’s strategy will have changed over that time and many of the patent applications will not even be critical to the company.

Startups, especially with the advent of the first to file age in the US, should develop well thought-out patent filing strategies that focus on filing an appropriate number of patents on inventions most likely to protect the company’s long term interest.

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