Patent Early? Maybe Not

Patent lawyers almost always instruct inventors to file for patent protection at the earliest possible date, but maybe this is not the best advice for many startups. To the contrary, I think this conventional advice is flawed–at least when it applies to inventions involving unproven products with no known customer base. Put simply, unless customers show that they care about the product that will be covered by the patent such that they are willing to pay more than it costs to make the product in volumes that will lead to sustainable profits, the patent will provide value only for the attorney who files it. Indeed, the absence of customers who wanted to buy the product is why very few of the patents that I have obtained for clients over my almost 20 years in the IP world have made money for their inventors. In my current role as an IP Strategist, I frequently counsel entrepreneurs that, prior to writing a $8-25K check to a patent attorney, they should instead first undertake customer discovery to determine whether anyone even cares about the awesome new product for which their attorney recommends they obtain patent protection. It’s one thing for me to counsel entrepreneurs Continue Reading →

A Branding Lesson for the Lean Startup Entrepreneur

I recently spoke to 2 different startup entrepreneurs who explained to me that each had “a brand that needed protecting.”  To each, this meant that they intended to focus their sales and marketing efforts on customers who fit image they saw as befitting their respective products.  While I was intrigued by the products and the amount of work each had done to date, I am afraid to say that if these entrepreneurs stay with their present mindset that only certain customers are desirable, each will fail.  Full stop. For one of these entrepreneurs whose product had already launched, brand protection meant that he was trying to dissuade “undesirable” customers:  apparently truck drivers LOVED his product and it was flying off the shelves at C-stores in which the test launch was conducted.  This entrepreneur perceived these sales as a huge problem because he saw his product as high end and “above” the truck driver market.  Indeed, in its marketing collateral and packaging the product was presented as high quality and upscale.  When placed in front of customers, however, it was apparent that the upscale buyer to whom the product was directed showed little interest, but that less affluent consumers—here truck drivers—found Continue Reading →

Hey “Patent Experts”: How Do You Like Groupon’s Patent Now? *Crickets*

Yesterday’s announcement of the firing of Groupon’s CEO and the hope for a rebirth of the company’s business model brought to mind a post that I wrote a couple of years ago railing against the self-interested opinions of “patent experts” on why Google offered $6 Billion for Groupon in late 2010.  Re-reading the post in the rear-view mirror, it is more clear than ever that Google made the offer for the precise reason I set out below in December 2010: Google, and other acquirers, buy business models, not patents.  As we strategy-focused IP people have been saying for years, a patent is worthless unless it covers a viable business model–either yours or one you want to own.  Google is interested in Groupon because it offers them an established business model in an area that fits into their long term business strategy.  Are the patents nice to have? Of course, but if Groupon didn’t have the patents, Google would still want to own them, and likely for a price in the same neighborhood as it bid.  At the end of the day, the Google’s offer for Groupon was a “build vs. buy” decision:  Google ran the numbers and believed that it would make more money buying Groupon than by building something Continue Reading →

Is Traction the New IP for Startups? Maybe Not for Yours.

“Traction is the new IP.”  This emerging mantra results in many startup CEOs eschewing the traditional path of patent and other forms of IP protection.  While I am aware of no rigorous studies conducted to date, anecdotal information indicates that startup entrepreneurs are increasingly saying no to patents, and likely to other forms of IP.  Instead, these entrepreneurs first seek to validate their business models and then follow business plans focused on generating recurring revenue, often avoiding altogether the step of protecting their business idea or product with IP.  From my own interactions with startup CEO’s, I can confirm that the pendulum has swung very far to the “IP is worthless” side of things.  But, is this emerging conventional wisdom actually correct? There is no doubt that over the years far too many startup company resources have been spent on patents and other forms of IP protection (many of which were paid to me in my former life as a patent attorney).  Moreover, if we were to track the number of patents held by successful startups and those held by failed startups,  a poor correlation would certainly exist between successful exits and the presence of IP protection.  An adherent to Continue Reading →

Do Patents Matter? Lean Startups Should Ignore Expert Advice and Let Their Data Drive Patenting Decisions

Many hold strong opinions on the value of patents to business.  Both in person and online, there are any number of “experts” who stridently insist that without patent protection, a company’s business goals are doomed.  With about 350,000 new patent applications filed in 2012, there is no question that many agree that patents create, and are even critical to, business value.  But, as the 2012 US presidential election cycle demonstrated, actual data can illuminate how expensive experts are often flat out wrong.  So where’s the “real data” that will allow business people to know whether a patent is the right decision for their company?   This information is likely even more critical for startup entrepreneurs, most of whom have no choice but to rely on self-interested expert opinion regarding the value of patents to their business. Entrepreneurs who follow Lean Startup Methodology understand that decisions must be driven by validated data, not beliefs or opinions.  It would be great if a source of data existed that could illuminate whether and in what circumstances patents matter to new business ventures.  Unfortunately, little information exists regarding the return on investment businesses of any size typically can observe from investment in patents.  There Continue Reading →

Lean Startup Methodology: How Patenting Decisions Fit into this New Business Framework

  One of the first questions start up entrepreneurs usually ask sounds something like this:  “Is it worth the effort and expense to get a patent on this business idea?”  In countless conversations with clients in my years as a patent attorney, I could usually articulate multiple reasons why the person seeking to to start a new business venture unequivocally needed to file a patent application as soon as possible.  Moreover, I could recite a litany of ills that could follow from failing to follow my advice.   Following this conversation, I could typically expect a fat check from the client, whereupon I would dutifully draft strong patent on the subject invention.  It was a nice living. These days, I work as a startup technology company CEO and look at patents much differently than I did in the past:  as a consumer of patent services myself, I now examine patenting issues from the vantage point of an entrepreneur, not as a lawyer whose business model centers on patents.  My viewpoint has been further honed in the last year as I have become a practitioner of the Lean Startup Methodology, a startup business framework that, in short, states that if an Continue Reading →