In defending patents, particularly in the context of startups, Mr. Harris states:
But most significantly for startups, that property right can represent enhanced value for investors and improve the prospects for obtaining early stage financing. A well-crafted patent—or even better, a collection of patents in a portfolio that forms a patent “thicket”—reveals and represents the fruits of product or service development, helping form a protective barrier against theft. If that product or service requires capital to come to market, investors draw some comfort from the patents’ protection of the investment while the product is commercialized. This early protection is vital because, in this author’s experience, it often takes companies years to go from “maybe a good idea,” to a prototype, to a testing environment, to a sold product, to market acceptance, to profitability, and finally, to investment realization.
My own personal experience mirrors Mr. Harris’: it can be difficult to draw attention from venture capitalists without solid patent rights. I haven’t practiced in a while, but my understanding is that venture capitalists still value patents in determining whether to invest in a startup. [Interestingly, I’ve never seen the use of term “patent thicket” in a positive light.]
Moreover, in spite of the assault on patents (and their cost), Mr. Harris notes that startups should take into account these ten considerations concerning patents: 1. Enterprise Value Enhancement; 2. Signaling Quality to Investors and the Investment Community; 3. Establishing Ownership of Technology and Inventions; 4. Assertion Against Competitors; 5. Avoiding the IP of Competitors and Others; 6. Revenue Generation/Licensing/Monetization of IP; 7. Facilitating Collaborative Research; 8. If You Get the Patent, You Block the Competitors; 9. The Laws Will Change . . . Again; and 10. Although Trade Secrecy and Copyright Offer Some Protection, There Is No Viable Alternative to Patents.Do you have any other considerations to add? Also, what is on the cost side?
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