Patenting – a startup’s tool to create value and boost growth

27.6.2019

Growth-oriented technology startups are the engines of innovation in our society. However, regardless of their business idea, whether it is developing a blockchain- or AI-based software product, a technically superior measuring instrument, or a groundbreaking way to produce food, it is surprisingly common with startups to not know how to incorporate patenting in their company’s business strategy.

A patent is not a formula for success

Creating a tailored IP strategy for any startup is a task involving a complex set of variables to consider. For instance, it does not necessarily make business sense to patent any invention that in theory could be patentable. One example would be filing a patent for a new, alternative method for manufacturing a known product; this is something I would strongly advise clients to think over, as these types of inventions are usually not easy to copy by competitors – at least by legal means.

In this case, it could be more useful to protect the invention as a trade secret, instead of a patent. However, if you intended to present your manufacturing method to business partners or the media, it would be advisable to file for a patent beforehand.

Quality is king in a patent application

If you decide to include patenting in your IP strategy, remember that the quality of your patent applications matters more than their number. What I primarily mean by quality is detailed, broad and comprehensive claims, a complete description of the invention, clear figures, and professional prosecution.

Of course, there are those who say it’s not necessary to focus on quality. For example, given that the value of a new European patent can easily rise to hundreds of thousands of euros (PatVal EU Project 2005), it must be an easy job to raise your company’s value in the eyes of potential buyers just by filing as many patent applications as you can, right? Well, usually it doesn’t work that way.

Does your patent application have value?

After you’ve filed your patent application, you are no longer allowed to add any new content to the application. If the patent application as filed doesn’t contain any material that could be interpreted to be new and inventive with respect to the prior art, it will not be possible to obtain a patent. This means that for an informed buyer, the value of a patent application is fundamentally lower that the value of a granted patent.

However, if your application has been drafted keeping quality aspects in mind, these requirements of novelty and inventive step would already be taken into consideration in the drafting process, and thus the novelty and inventive step of your invention will be easier to defend.

On the other hand, you are allowed to re-specify the scope of protection of your patent application during the examination stage within the limits of the features presented in the application as filed. This possibility may prove to be a real advantage, as it gives you the opportunity to build a patent family based on your application by filing divisional applications before the first application proceeds to grant.

By making sure your applications are drafted to satisfy the highest quality standards, you can increase your likelihood of obtaining a valuable patent family based on each application, with a broad scope of protection covering all relevant aspects in their specific technical field.

Stable foundation of a patent

As to granted patents, it’s worth keeping in mind that if your patent lacks substance, it will be more difficult to license or make use of the exclusive right conferred by the patent, because in case of an infringement the infringer would most likely attempt to invalidate the patent.

To be able to avoid such post-grant invalidation, it’s important that the patent has been built on a stable foundation. The cornerstones of this foundation are the novelty and inventive step of the invention, but also a complete description and prosecution formalities. As informed buyers are usually prepared to perform an in-depth analysis of the patents and patent applications, some seemingly small mistakes made in the prosecution stage may very well end up being detrimental to the value of the patent portfolio at this point.

Protect the seeds of growth

To sum it all up, quality is decisively important in patenting if you want to create more value before selling your business. In addition, quality also plays a key role if, instead of creating value, you’d rather be looking to gain long-term international growth.

In many cases, the growth of established technology companies is actually based on the patents they filed during their early years to protect the company’s core technology. If they are not drafted properly, these patents will be vulnerable to challenges and attacks from competitors, essentially weakening the patent owner’s opportunities for growth and freedom to operate.

You can read more about quality in a patent application in our previous blog ”Arvokkaan patentin resepti” (in Finnish) by Folke Johansson (Director, Patent Department) and Tomi Konkonen (Team Leader, ICT and Electrical Engineering).

 

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