What is the cost of a cheap patent?

What is the cost of a cheap patent? It turns out to be very expensive.

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Some startup companies do not want to spend much money on patents, so they get the lowest cost provider for IP services. The result: a cheap patent. A cheap patent that might not have the proper claim scope to protect against competitors stealing the market using your ideas, or a cheap patent which is poorly drafted or quickly prosecuted so that it will not withstand reexamination or litigation.

What does it cost to lose your competitive advantage against a better financed, bigger competitor with better economies of scale, better distribution, and a recognized brand name?

The saddest thing is to tell an entrepreneur that their cheap patent does not cover them as thoroughly as they thought. They have spent the last several years of their life on their startup, putting their heart and soul into commercializing their idea, only to find out that, no, their cheap patent will not stop BigCo from stomping all over their marketplace. What can the startup do? Compete on price, distribution, marketing? This is not where their competitive advantage lies.

The startup has a competitive advantage in that it sees a need in the marketplace that nobody else sees. The startup’s ideas usually have two types of risks: technology risk and market risk. The technology risk is whether the idea actually works, and the market risk is whether people will buy the product. Once these two risks are removed, it is very easy for a competitor to enter the marketplace – but only after the entrepreneur has taken the risk, proven the technology, and educated the market. The entrepreneur plowed new ground, and then competitors will flock to it.

This is where solid IP protection comes into play. A good patent portfolio will give the startup some leverage or competitive advantage when dealing with competitors. The startup is not necessarily going to litigate the patents right away, but will use the patents to begin some sort of negotiation or discussion with the competitors. A credible threat of litigation is what gives the startup a seat at the table. But when the patents are weak and cheaply done, there is no reason why a competitor would even bother negotiating.

BlueIron was created to make solid patent protection affordable. We finance patents for small companies, giving them the best possible IP protection and the best chance for success, without draining the company’s precious cash reserves. Please contact russ.krajec@blueironip.com for more info.