When a startup is evaluated by an investor many different factors are looked at, but a strong Intellectual Property (IP) strategy signals a direction for the startup which can minimize risk and increase value. A conversation about IP is beneficial but many founders do not know where to start.
Here is a list of 5 patent strategies and the benefits and costs of each:
- Single patent strategy
- The startup protects its offerings with a single patent. Such patents need to be comprehensive, for example, covering composition of matter which conveys very extensive coverage.
- Benefit: Lower cost and necessary in a field that is just emerging and invention is rapidly occurring.
- Cost: If the patent is determined to be invalid the entire business could be at risk.
- Claim quality becomes critical when a single patent strategy is employed so that if the lead claim is denied following claims can survive and protect the business. Make sure you have strong legal resources on your team.
- Multiple patents strategy
- The startup defends its offerings with multiple patents. The strategy often involves a carefully designed patent portfolio where each filing builds upon past filings as part of a plan. Two variants of a multiple patent strategy are a “Fencing Strategy” and a “Blanketing Strategy” (see below)
- The multiple patent strategies are more effective at mitigating risk of the single patent strategy and therefore more common.
- Blanketing strategy
- The efforts are made to create a “minefield” of patents complicating a competitor’s ability to operate while indirectly cloaking the startup’s real technical intent.
- Benefit: Patents no longer fitting the commercial strategy in later years can be abandoned, sold, or licensed generating some future income streams.
- Cost: It is less structured and has the risk of being much more costly in later years as maintenance fees increase
- In this strategy, a startup patents not only the base technology, but also peripheral and even unrelated technologies.
- Fencing strategy
- Is a more methodical approach of a “blanketing” strategy where different patents are developed blocking certain lines or directions of R&D (e.g. a range of variants of a chemical process).
- Benefit: This approach has value if developing technology is very expensive and the time to recovering a return is longer (e.g., years vs. months).
- Cost: This strategy requires a well-developed product and commercial road map peering in the future several years.
- This strategy has greater value in startups that are stable, well defined and maturing.
- Surrounding strategy
- A strategic patent is surrounded by other patents.
- Benefit: Collectively block the commercial use of patented technology even after the core patent has expired.
- Cost: The surrounding patent(s) are generally less important than strategic patent and can lead to higher costs without added value.
- Often a “surrounding” strategy emerges from a “fencing” strategy as the commercial value becomes clearer.
To learn more about Creating a Competitive Advantage with Intellectual Property visit university.ventureforge.co