Wednesday, November 21, 2007

The Role of Patents in a Startup

I had the opportunity to speak to the Texas Evening Entrepreneurs. Founded in 2005, the group was created and run by students in the Texas Evening MBA program. One of the members raised the question about patents and how important are they. In some cases patents along with copyrights, trademarks, and trade secrets are crucial to securing funding. This is true in the area of medical devices and healthcare in particular. In the area of software it is less so.

One begins by filing a provisional patent. The cost is fairly low (around $300 the last time I checked). Later a full patent can be filed when some funding is secured. A competent patent attorney plays a key role in helping perform a patent search on prior art. Many patent attorneys will defer payment until funding can be secured.

Since software tends to be more of an execution play, patents may not be as important. The time it takes to litigate a patent can run from 2 to 3 years if not longer and among startups there’s often little money or assets to be seized and it’s often easy for competitors to work around patents to achieve the same goal.

Best regards,
Hall T.

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