Patent ownership increases startups’ chances to receive venture funding by over fifty percent. However, determining if, when, and how to patent your startup’s ideas can be challenging, especially for the vast majority of startups not having legal counsel. The lean nature of most startups can feel antithetical to the idea of spending thousands of dollars to protect an early-stage idea. Even so, the data speaks for itself—patent protection is a must-have for early-stage tech startups seeking venture backing. This article provides seven tips for protecting your startup’s ideas without compromising a lean business model.
1. Weigh the Costs and Benefits
Like most startups’ decisions, patenting should be viewed as a cost-benefit analysis. The benefit is clear—patents prevent others from making, using, selling, or offering to sell your idea. Moreover, they give startups the freedom to pivot to a licensing model if needed, and they strongly boost startups’ chances to receive venture funding. When used as collateral, patents increase venture capital funding by an average of 76% over three years and increase IPO funding by an average of 128%. A study conducted by professors from Harvard Business School and NYU’s Stern School of Business found that patent protection increased startups’ odds of receiving VC funding by 59%.
A patent’s cost is both fiscal and temporal. The standard filing fee for a nonprovisional U.S. utility patent application is $320 as of the writing of this article, but lower filing fees are available for small entities, micro entities, and provisional applications. Additional fees are charged throughout prosecution of the patent (that is, the process of working with the patent office), but the bulk of patent-related expenses are typically paid to patent attorneys to write the patent application and correspond with the patent office on your behalf. A nonprovisional utility patent typically costs about $5,000 - $20,000 in total, but the bulk of these costs can be delayed a year by pursuing a provisional patent application. It typically takes about two years to receive a patent, but the delay varies greatly by subject area and can be reduced in certain circumstances. On balance, technology startups are typically best served patenting early and aggressively, so long as doing so does not financially impede the business from performing its core functions. As venture funding becomes increasingly scarce and competitive, patent protection may transition from a funding advantage to a funding necessity.
2. Use Provisional Applications to Practice a Lean Approach to Patenting
Provisional applications may be used to align patent protection with a lean business model. These “placeholder” applications allow filing entities to cheaply and quickly preserve a patent filing date for one year. To do so, a specification (that is, a written description of the invention), at least one drawing, and a $300 filing fee (or $75 for a micro entity) are required. If the filing entity fails to file a non-provisional application within twelve months, the provisional application becomes abandoned.
To ensure that patentability requirements like written description and enablement are addressed up-front, provisional applications should be drafted in a manner similar in structure to that of a non-provisional application (or “normal” patent application). However, startups lacking the funds necessary to draft a non-provisional application can file virtually any disclosing documents as a provisional application—for example, a PowerPoint presentation, a draft of an owner’s manual, engineering drawings accompanied by text, or a transcript from a speech with an attached drawing could be filed as a provisional application. These “half-baked” provisional applications are significantly more problematic than those drafted as if they were non-provisional applications, but they are significantly better than delaying filing altogether, especially if doing so would allow a competitor to obtain those rights in the United States’ First-to-File patent system. Startups should only use “half-baked” provisional applications as a last resort and should include as much relevant material as possible when doing so.
3. Take Advantage of Discounted Filing Fees
Startups can also reduce filing costs by taking advantage of discounted filing fees for small companies. Small entities (generally speaking, businesses with 500 or less employees) pay half the standard fees at the USPTO. Micro entities (small entities meeting additional requirements under 37 CFR § 1.29) pay one-quarter the standard fees.
4. Assign the Invention to the Company, Not the Inventors
When a patent is assigned to multiple entities (such as inventors), the entities become joint owners of the patent. If multiple entities own a patent as joint owners, “each of the joint owners . . . may make, use, offer to sell, or sell the patented invention . . . without the consent of and without accounting to the other owners.” A joint owner may assign its interest in the patent to another entity, unilaterally allowing any number of third parties to make, use, offer to sell, or sell the patented invention. Moreover, “[a]ll parties having any portion of the ownership in a patent must act together as a composite entity in patent matters before the [Patent] Office.” Further issues can arise if a joint owner leaves the company. In total, joint ownership creates a significant amount of risk (which will likely deter investors) without any cognizable benefit. Startups should avoid joint ownership issues by assigning the invention to the company rather than any individual founders, inventors, or employees.
5. Be Aware of Patent Restrictions for Software Inventions
Software inventions are more challenging to protect than their non-software counterparts. Under 35 U.S.C. § 101, patents may be granted to new and useful processes, machines, manufactures, and compositions of matter (and improvements thereof). Abstract ideas, natural phenomena, and laws of nature are generally ineligible for patent protection; however, if the invention amounts to “significantly more” than the patent ineligible category to which it belongs, the invention is patent eligible. Subject matter issues often arise in the context of software inventions because mathematical algorithms are abstract ideas.
Despite subject matter issues, there are several ways to protect software inventions. First, you can obtain patent protection by adding a physical element (that is, a machine, manufacture, or composition of matter under 35 U.S.C. § 101) to the invention. However, note that generic computer elements like a processor, memory, and user interface are not sufficient to render a software invention patent-eligible. Second, you can disclose specialized algorithms or hardware to show “significantly more”—however, the “significantly more” requirement is a high bar. Third, you can protect the idea using copyright law or trade secret law, as discussed in the below sections.
6. Consider Using Copyrights or Trade Secrets to Protect your Invention
Copyright protection is free and automatic, though there are advantages to formally registering a copyright. Note that copyright law protects expression (for example, lines of code), not the ideas represented by the expression. In other words, in the case of software protection, copyright law does not prevent competitors from copying your ideas so long as they write the code from scratch. Copyright protection may be used separately or in conjunction with patent protection.
A trade secret is a piece of information that the owner has taken reasonable measures to keep secret and that derives independent economic value from not being generally known. Unlike post-AIA patents, which last for 20 years from filing, trade secrets can last indefinitely if their secrecy is maintained. Note that a single idea cannot be protected by patent law and trade secret law at the same time; one or the other must be selected. For inventions that are unlikely to be reverse engineered or independently invented, trade secret protection can offer cheap, indefinite protection. However, it is generally advisable to seek out counsel before relying on trade secret protection—if not handled promptly and properly, reverse engineering, insufficient secrecy protections, economic espionage, or a disgruntled employee can forfeit your trade secret.
7. Seek Professional Counsel
Though it may seem tempting to save money by drafting a patent application on your own, doing so comes with an exorbitant time investment and creates excessive risk. Learning enough about patent law to draft an application can take hundreds of hours, and the time investment is rarely warranted—76% of pro-se applications become abandoned. For comparison, 35% of represented applications become abandoned. Inventors who write their own patents create unnecessary risk (such as design-around risk), and the same can be said for copyright and trade secret protections. Though the cost of legal representation can be daunting, cost-saving options like provisional filings can help. When deciding what intellectual property protection a startup can afford, one simple question often simplifies the analysis—can you afford to leave those assets unprotected?
 Joan Farre-Mensa et al., Do Patents Facilitate Entrepreneur’ Access to Venture Capital?, Drexel University LeBow College of Business (Oct. 6, 2016), https://www.lebow.drexel.edu/sites/default/files/event/1478115147-joan-farre-mensa-paper.pdf.
 35 U.S.C. § 271.
 See Farre-Mensa, supra note 1; see also Kathi Vidal, Remarks By USPTO Director Kathi Vidal at the ARPA-E Energy Innovation Summit, United States Patent and Trademark Office (May 24, 2022), https://www.uspto.gov/about-us/news-updates/remarks-uspto-director-kathi-vidal-arpa-e-energy-innovation-summit.
 Vidal, supra note 3.
 Farre-Mensa, supra note 1.
 37 CFR § 1.16.
 See id; see also How Much Does a Patent Cost, Upcounsel (June 18, 2020), https://www.upcounsel.com/how-much-does-a-patent-cost.
 How Long Does it Take to Get a Patent: Everything You Need to Know, Upcounsel (Oct. 27, 2020) https://www.upcounsel.com/how-long-does-it-take-to-get-a-patent#:~:text=Get%20a%20Patent%3F-,According%20to%20the%20United%20States%20Patent%20and%20Trademark%20Office%20(USPTO,in%20six%20to%2012%20months.
 35. U.S.C. § 111(b).
 See 35 U.S.C. § 112.
 37 CFR § 1.16.
 35 U.S.C. § 262.
 MPEP 301.
 MPEP 2106.04.
 MPEP 2106.
 See John J. Penny V et al., PTAB Reaffirms High Bar for Patent Eligibility Under Alice, Mondaq (Mar. 14, 2016), https://www.mondaq.com/unitedstates/patent/474266/ptab-reaffirms-high-bar-for-patent-eligibility-under-alice.
 See 17 U.S.C. § 412.
 17 U.S.C. § 102.
 See id.
 See 18 U.S.C. § 1839(3). Note that trade secret law varies by jurisdiction and applies at both a federal and state level.
 Compare 35 U.S.C. § 154, with 18 U.S.C. § 1839(3) (defining the term “trade secret”; note the lack of a durational limitation).
 Patents are public disclosures, so patented subject matter does not qualify as a trade secret.
 Kate S. Gaudry, The Lone Inventor: Low Success Rates and Common Errors Associated with Pro-Se Patent Applications, National Library of Medicine (Mar. 21, 2012), https://pubmed.ncbi.nlm.nih.gov/22470439/#:~:text=76%25%20of%20the%20pro%2Dse,in%20the%20represented%20patent%20set.
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