What Startups Need to Know About Patenting Software

Because patents can take years to obtain, startups often delay filing patent applications until they believe they have the time and resources to devote to those patents. Yet, even resource-strapped startups with in-house attorneys can realize several benefits from developing strategic patent portfolios for their products, including:

  • Deterring competitors from infringing on their technology and products
  • Increasing the value of the company to obtain financing or pursue an exit strategy

Below, we discuss ways startups can obtain patents even with limited resources to set a foundation for long-term patent success. We also address common myths about the patenting process.

Maximizing Patent Benefits with Limited Resources

Typically, the process followed by tech startups is a reactive “invention-driven” one, whereby the company waits for inventors to approach management with inventions or ideas they hope will be patentable. The company’s patent attorneys then evaluate and file patent applications, usually in the order of innovativeness.

This approach can result in some good patents, but in addition to the significant resources required to secure the patents, this approach can lead to:

  • Low-value patents: The company obtains patents on inventions that do not provide significant value (e.g., patenting an invention not used in any of its products).
  • Gaps in protection: The company fails to obtain patents on inventions that are core to the company’s business. This can lead to a critical inability to block competitors from selling those inventions or affect the company’s future growth plans.

A better approach often is a proactive “business-driven” patent strategy, in which a company’s business goals drive its patent strategy. Startup executives can start by asking these questions and then prioritizing patent filings accordingly:

  • What is our competitive advantage? Are there key product features we have that our competitors do not? What product features keep our customers coming back?
  • Which elements of our competitive advantage are patentable? Which elements satisfy the legal requirements for patentability?
  • Which elements would most secure or strengthen our competitive advantage if patented?

By using a business-driven patent strategy, a startup can focus its limited resources on obtaining patents that provide the most value to the company while minimizing the chances of both investing resources in low-value patents and failing to obtain patents for business-critical inventions.

Using Patents for Long-Term Success

Given the limited resources technology startups generally have, there are several things to consider to strategically use those resources when securing valuable patents.

  • Provisional Patent Applications: Provisional patent applications are “scaled down” applications that buy the company a year to file the non-provisional (utility) patent application or an international patent application (PCT patent application). You can learn more about provisional patent applications in this episode of Blueshift IP’s The Software Patent Podcast. Benefits include:
    • Deferring costs: New companies can defer costs while seeking funding.
    • Secure an early filing date: If a company is expecting to make significant improvements in an invention in the next 12 months, a provisional application can secure an early filing date.
    • File multiple applications: Filing multiple provisional applications will give the company additional time to decide which inventions should be refiled as non-provisional applications.
    • Delay examination: A provisional patent application can slow the examination process down, if desired.

Provisional patent applications should not be used when an invention is fully developed, a company has secured its funding, or when an early examination is desired.

  • Strategic Patent Searches: Performing a thorough and strategic patentability search can keep companies from wasting valuable resources pursuing patents with a low likelihood of broad success. While the searches can be conducted after filing a provisional patent application, Blueshift IP strongly recommends patent searches be conducted before the non-provisional patent application is filed.
  • Foreign Filing Strategies: Many startups fail to consider filing foreign patent applications (PCT applications) due to the cost and what they perceive as currently irrelevant markets. Companies should consider filing PCT applications in markets where future businesses, customers, and acquirers could be located. A PCT application preserves a company’s foreign rights for 30 months from the priority date for a relatively low cost, and there are many combinations available to match a company’s preferences or needs based on budget, examination speed, and geographic coverage. You can learn more about foreign filing strategies in this episode of our The Software Patent Podcast.

Recognizing and Addressing Common Patent Myths

To build successful patent portfolios, startups need to be aware of the following myths surrounding patents and patentability:

  • Myth #1: Patents are a “game of kings” and not suitable for startups: The reality is that obtaining even one strong patent on core technology can set a company apart from its competitors. Even a small portfolio of strong patents makes a company more attractive to acquirers.
  • Myth #2: Companies should wait until they grow before filing patent applications: Legal deadlines and competitor activity can cause a company to forfeit its patent rights if applications are not filed early. (The U.S. has not been a “first-to-invent” system for many years.) A company can lose rights if a competitor launches a product, publishes a paper, or files a patent application on their inventions before the company does.
  • Myth #3: “Quick and dirty” provisional patent applications provide enough protection: A provisional patent application protects only what it describes. Failing to include sufficient detail can lead to a loss of priority date, as if the company had not filed the provisional application at all.
  • Myth #4: Provisional patent applications reduce costs: Provisional patent applications defer costs, but they also increase total costs and defer protection. The costs of filing both applications over the course of one year is more than filing a non-provisional application alone.
  • Myth #5: Patents do not provide meaningful protection for software: Patents can provide strong, broad, and defensible software protection when designed and written properly. They protect new and useful functionality from infringement by anyone in the patent’s jurisdiction, even if the infringer had no knowledge of or access to a company’s patent or product. In contrast, copyright only protects against copyright of code by someone who had access to the code, while trademark only protects identification of goods and services, not functionality. Trade secret only protects against misappropriation of secrets by someone who had access to those secrets.

Startups can realize significant benefits from filing strategic, well-written patent applications, but they need to work with a knowledgeable patent attorney who understands how to view IP through a business lens. Furthermore, startups that are seeking to patent software innovations need to seek out counsel who has significant experience successfully filing software patent applications.

The attorneys at Blueshift IP combine their unique backgrounds in computer science and law to assist startups, and other companies, in making strategic decisions regarding their software patent portfolios that further the overall goals of their businesses. If you are interested in learning more about patenting your startup’s software innovations, please contact us directly.

If you’re interested in learning more about how to make strategic decisions regarding your startup's patent portfolio, listen to our special seven-part podcast series Demystifying Patent Decisions, which is part of The Software Patent Podcast.

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