I just want “protection,” but I have a run-of-the-mill product.
Most startup CEOs want patents because they want ‘protection,’ so they go to a patent attorney. And the patent attorney is in the unfortunate situation of having to find something “inventive” amongst a bunch of run-of-the-mill technology.
For early stage startup companies, the entrepreneur becomes enamored with the “grand idea” of their business model, and they are terrified that someone else will copy or “steal” their “invention.”
The reality is that the entrepreneur is often solving a half-way obvious problem with fairly obvious technology.
The insight of the business is that no adequate solution is available for a particular problem, but the solution is pretty run-of-the-mill. The invention is not a new technology, it is merely applying existing technology to a previously-unsolved problem.
The patent attorney is caught between a rock and a hard place.
Every patent attorney has been stuck with a client who “wants a patent” but has very little in inventive concept or new technology. Even though the patent attorney asks – pleads – with the client to tell them what is new or novel, the inexperienced and newly-minted startup CEO just insists on getting a patent but provides little else.
Some patent attorneys just write down what the client says and files it as a patent. They know they will make lots of money during the prosecution phase (the back and forth with the examiner) trying to find something – anything – that will get a patent allowed.
Other patent attorneys will try to improve the idea, add more details, brainstorm additional concepts to help the client flesh out the idea and put more meat on the bone for the patent examiner.
Either way, the patent attorney knows they are going to the Patent Office with something that will be less-than-optimal. Sadly, for most inventions for early-stage companies, this is the case.
Patents are far, far more narrow than most startup CEOs want to admit.
I often hear from CEOs that they “own” some obnoxiously large part of the market based on their patent, or they explain how a huge swath of competitors “infringe” their patents.
These CEOs read the description or specification of their patent and believe that the lengthy description is what gives them “protection.” That part in the back of the patent application – the claims – seems like a bunch of legal nonsense.
The truth is that the claims – and only the claims – are the part that give “protection.”
When a patent attorney is working with a difficult case and there is very little inventive concept, the best that can be done is to load up the claims with lots of limitations. In other words, the patent attorney must make the patents very narrow, often times so narrow that there is no way a competitor could ever infringe.
Good patents protect a competitive advantage, but it must be a specific technical advantage.
A good patent is one where the patent protects the competitive advantage of the company. But the competitive advantage of the patent is only where the technology is the single biggest reason why a customer bought the product.
Very few businesses have a competitive advantage that is pure technology. Most businesses have a competitive advantage because they are skilled at marketing, packaging, and selling a product. They may have a competitive advantage based on their relationships with suppliers or buyers.
One technology is often interchangeable with another. Just because your technology solves a customer’s problem, it does not mean that a different technology might solve the same customer problem.
It is rare that a patent protects the single, best way to solve a problem.
Most patents protect just another way to solve a problem. And they provide zero “protection” against a competitor who can pick the other way to solve the problem.
What’s the risk of getting bad patents?
The biggest risk of getting bad patents is making bad business decisions.
If a CEO believes that their patents are far, far more broad than they really are, the CEO has a tendency to feel “protected” when they really are not. They take business risks or act far bolder than they should.
They fail to invest on what is needed to build the business – marketing and sales – and complacently believe that they will “license” their technology to the competitors that are steamrolling them.
From what I see in analyzing a dozen or so patent-backed businesses every week, they can fall into the trap of believing that their patent gives them a pass from doing the heavy lifting of putting a product in the market. Somehow, the CEO is intimidated by the difficulty of building a product, marketing the product, and selling the product, and they take their foot off the gas because of their patents.
If the CEO managed the business as if they never had a patent, would they behave better? In many cases, yes. They would focus on the blocking and tackling it takes to build a product that a customer wants, find that customer, and close the sale.