Top Reasons for Applying for a Software Patent

Top reasons for applying for a software patent include: 1) you want to signal to potential investors/partners that you are serious about your efforts and have something unique enough to protect via patent; 2) you will need defensive patents to even the playing field against your competitors; and 3) your business model depends on licensing technology, know-how, and IP. Before filing for a patent, you should consider each of these in determining what you intend to do with the patent application now and in the future.

You want to signal to potential investors/partners that you are serious about your efforts. This is one of the most common reasons for filing a patent application. For years, studies have shown that companies with well-developed patent portfolios are more likely to succeed than those without. That might be because patents provide direct benefits that help companies succeed (e.g., licensing opportunities that directly increase revenue) or for other reasons – such as the fact that a management team is more likely to succeed if it’s got its act together and is savvy enough to be thinking through issues such as IP early on, or because a company with enough funding to file for patents is more likely to succeed than one that can’t raise the money they need. Regardless, having a considered IP strategy and one or more patent applications pending often signals to your audience that you are serious about your endeavor.

You need to even up a playing field.  In additional to competing with other companies in your field, those same potential partners and acquirers mentioned above can easily turn into competitors. Having patent applications on file before detailed discussions begin may signal to them that you are a serious player – and make it more expensive for them to rip you off. The US legal system penalizes those who knowingly, willfully, infringe a patent application by tripling any damages in eventual litigation, so the costs of defending against the risk of losing a patent lawsuit start early on – possibly as soon as the other side mentions to their legal team that they’re in talks with an interesting company and, why, yes, it does have one or two patent applications on file. Determining whether and how to deal with a competitor’s patent application (e.g., license, acquire, design around, rip off) takes time and costs money, so just having the application on file increases the costs to your competitors. Furthermore, if there are competitors you know to be litigious or who are extremely active in licensing technology to and from other competitors, a solid patent portfolio may act as a good insurance policy. In the event that you are approached by one of these competitors, having a stable of issued patents and pending applications will put you in a better position at the negotiating table.

Your business model depends on licensing intellectual property. Some inventors develop technology that they cannot take to market but that they intend to license to others who can do so. This is a tricky strategy from a business perspective because you’ve got to have the connections needed to reach target decision-makers and they’ve got to perceive you as a serious competitor, if not a peer. However, if you are dealing with similarly sized competitors, or have the resources to engage with larger entities, building out the IP portfolio will be extremely helpful.

Deciding whether your company should file an application involves a very company-specific and industry-specific analysis, and the best approach may vary from one invention to another even within a single company. In some industries, getting traction or growing a user base or investing in data mining techniques or anything else matters more than patent portfolios; in other situations, patents are mission critical. You will probably have a sense for what type of industry you’re working in based on your early research and competitive analysis. You may have a good sense for how innovative you’ve actually been or you may benefit from an unbiased third party in assessing that. Either way, given that it takes years for an application to make its way through the Patent Office, the sooner you start, the better.

There are of course plenty of other reasons to file applications. In the same way that a company might hire outstanding coders to build your software assets, for example, some companies invest in building an outstanding patent portfolio. Other people have the resources to file speculative patent applications – essentially gambling that once the technology catches up to them, they’ll be able to find the partners and funding they need to implement and market their innovations. Whatever the reason, think it through before filing, as it may influence how and what you file.

Contact us today to find out how Blueshift IP can craft and execute a patent strategy that is tailored to your company’s business to maximize the value of your patent portfolio.

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