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Not many would think of patents while starting a business. No matter the innovation and involvement of the latest technology, patenting seems out of bounds to founders to begin with.
There are many technologies and processes that businesses are using these days without thinking of patenting them. Part of the reason why they avoid it is because of the perception of hassles in the process. While it is certainly a lengthy process, there are many benefits associated with patenting, especially when done during the early stage of starting up.
Before we focus on understanding how patents can be useful, understand what a patent is.
What is a patent?
Patent registration enables the rightful owner to leverage exclusive rights over the innovation for 20 years. These rights will help them open up a new revenue stream as one can easily capitalize on patents. This is because, on paper, patents become part of your assets and the more you make it work and do well, the more value it will have.
Also, note that once these 20 years are up, the patent goes to the public domain and becomes accessible to everyone.
Does patent facilitate venture capital investment?
There is always a higher possibility of the sale of corporations, mergers or to roll out an IPO when you have patents. It is something that incentivizes investors as they see more potential in such a startup by overcoming the liability of newness. Also, more than 67% of venture-backed startups agreed to secure investments where patents played a major role. 80% of startups that received venture capital investment already owned patents. VCs like to see not only innovation but the confidence in novelty as well, which demonstrates that the innovation has real potential and value.
Research suggests a direct relationship between market share and patent registration. Consider how Carles Puente won the European Inventor Awards in 2014 where he leveraged fractal geometry for creating a mobile antenna that allows the device to be slim. He then started his company, Fractus S.A in Spain but could not cater to the large demand for fractal-based antennas for 1.5 billion smartphones in a year. Therefore, he chose to patent it and started licensing the technology to almost all smartphone makers. He believes that it is because of patents that he has been able to reach a wider market wherein more people are getting benefits out of it. Similarly, if you are running a business boasting a patent that can make a huge difference in people’s lives then it makes sense to license it, for others to use your patented technology or innovation.
When should you patent your idea?
It is always wise to patent your innovation asap! Because more delays mean someone else may get the benefit of first filing. The patent office in India works on first-to-file rule wherein no matter when you get the idea about the patent, it is only after filing that you can secure it before somebody else files the patent for a similar innovation. Therefore, securing an early patent filing date is always recommended even if it is work in progress. Such patents are treated as provisional patent applications wherein you can secure the early filing dates, even without making the full payment upfront. You will then have one year to turn the provisional patent applications to a non-provisional one. Also note that you are putting your idea, innovation, and intellectual property in big trouble if you are publicizing your invention without patenting it. In case you need to go public with your idea and share its details, you should file the patent first before moving ahead.
Benefits of patent
Boosting product development
Availing the patent grant for product development can significantly boost the entire process to an extent of pacing it up. Since most startups aim for global reach, speed plays a crucial role in executing aggressive market outreach activities. Protecting the patent and disseminating the manufacturing or process is possible without any fear of someone stealing your idea.
Filing for patents early can help businesses get an edge over their competitors. No grant at an early stage helps the startup stand tall among the many players.
For startups looking to engineer success, a patent is the fuel that can keep them going for long without losing out on opportunities. India is still far behind western startups when it comes to prioritizing innovation rather than business, wherein the latter follows naturally. The more you emphasize on seizing the business idea for yourself and patent it, the more relaxed you will be in the future where innovation will take the front seat in driving the business.