Patents For Startups: Go For It!
Sandra K. Johnson, Founder, CEO & CTO of Global Mobile Finance, Inc. and master inventor, shares her expert advice on the patent process.
A US patent grants its owner the exclusive right to use, build sell, etc. the invention in the US. The percentage of all inventors that are women reached 12% in 2016. I have over 35 years of experience in technology, including 26 years with IBM and over 5 years as an entrepreneur. I have over 40 pending and issued patents. Here I share with you some key points based on my experiences and lessons learned in the patent process.
Why should a startup company pursue intellectual property protection via patents? Some reasons are listed below:
- Value Creation: a company’s patent portfolio increases its value. It is attractive for potential investors and increases its acquisition value. In my own experience, investors see value and focus with startups pursuing patents. In addition, many large companies seek new and innovative technologies from startups and are willing to pay top dollar. Patents build a strong business asset component that is critical for a new venture.
- Revenue Potential: patent exclusivity enables you to generate revenue in several ways. Your business can generate revenue on the product or service developed based on the invention. You can also secure licensing agreements to generate a stream of income. Another viable option is cross licensing agreements. This requires the company to have issued patents, which may take 2–5 years. Once obtained, one can enter into agreements with entities that have patents your business may be interested in leveraging, and vice versa. Revenue may not be exchanged but your company may use a key innovation at little or no cost. Some assert that seeking early patent protection is not recommended for startups because the company may pivot to another technology. The time and expense for obtaining a patent may outweigh the advantages. However, even if your company pivots, it may still generate revenue or cross licensing agreements with the initial patented technology.
- Defensibility: a patent gives startups a competitive market advantage. It prevents others from providing the same product or service. It also becomes a barrier for others to enter the market, with the same invention, for up to 20 years.
There are several patent misperceptions and roadblocks startups encounter when pursuing patent protection, as listed below:
- One must create a game-changing technology to obtain a patent. Many game-changing technologies are patentable; however, most patents are optimizations or enhancements on existing technologies. Leveraging existing innovations in an unusual way, or in a different industry, may also lead to a patentable invention. I was surprised by how what was just normal thinking for me turned out to be patentable. It was my foundation for filing dozens of patents over the years.
- One must build the technology to get a patent. One only needs to describe the idea in a manner that experts in the field can understand and built it. Most of my patents were initially pursued when the invention was idea.
- Obtaining a patent is expensive. The patent process costs approximately $10,000. This can be prohibitively expensive for startups. The Cordozo/Google Patent Diversity Project addresses this issue. It covers the legal costs for women and minorities pursuing patents, while the inventor pays the filing fees. I have filed a few patents and have several pending through this program.
- Obtaining a patent is time-consuming. While this may be true, the amount of time the inventor spends can be minimal. Once the idea is described then most of the time is used by the IP attorney. However, the inventor will get with the attorney to ensure the patent application is in fact the idea.
I encourage you to consider whether your idea, technology, etc. for your startup is patentable. If so, then move forward and make it happen!
Sandra K. Johnson is the Founder, CEO & CTO, Global Mobile Finance, Inc., a fintech startup company in Research Triangle Park, North Carolina. It is developing geeRemit, a relationship-driven remittance mobile app for Africa. She is the first African-American woman to earn a Ph.D. in computer engineering. She has obtained many firsts in her 30+year technology career. She had a 26-year IBM career, including serving as the CTO, IBM Central, East and West Africa. She is a Master Inventor with over 40 pending and issued patents and over 80 technical publications. Dr. Johnson earned B.S. (summa cum laude), M.S. and Ph.D. degrees in electrical engineering, from Southern University, Stanford University, and Rice University, respectively. She is a member of the Institute of Electrical and Electronics Engineers (IEEE) and the Association for Computing Machinery (ACM). She is also an IEEE Fellow and an ACM Distinguished Engineer.