Critical Patent Strategies Startups Can Use From Large Companies

Patents are critical assets for startups—especially in their infancies. The “whats” and “hows” of innovation protection are essential, but not usually obvious. Despite a limited budget, a startup can steal the best patent strategies employed by large well-established enterprises to protect their new ideas. 

Yes, patents are expensive. But the value that a strong patent portfolio can give your company is unmatched. Common denominators underlying strong patent portfolios include:     

• A skilled patent attorney to draft the patent claims
• Broad patent protection for key products
• Patent protection for strategic market segments and geographies 
• Monitoring patenting activities of competitors
• In-house management of the patent program

What is a patent strategy?

Patent strategies are a series of steps that a company takes in order to secure and position its inventions, innovations, and/or intellectual property. It covers which innovations you select to give patent protection to, which markets you want to protect patents, who you hire to prepare your patent applications, etc. 

Patent claims specifically define the scope of the protection to be conferred by the patent with the other parts of the patent providing support and background. The title, summary, and abstract often do not align directly with the claim scope so avoid that common confusion. 

Patent laws require that the patent applicant explain and distinctly claim the subject matter which the inventor(s) regard as their invention. Each claim must be carefully drafted, to ensure it is neither too broad to avoid prior art nor too narrow to be worthless for enforcement. Even a  single word can change the entire meaning of a patent claim in ways that are not self-evident.

Patent infringement example

For example, Kustom Signals Inc manufactures and sells traffic radars and holds a patent for digital-signal processing of traffic radar. The patent identifies as “selecting either the greatest magnitude or higher frequency search.” It brought a claim of patent infringement against Applied Concepts since the accused device searched for both magnitude and frequency. 

The case ultimately boiled down to the use of the word “or” interpreted as a choice between either of the two alternatives. The outcome would have been different had Kustom Signals used “and” in its patent claim. “Or” is exclusive while “and” is inclusive. These two tiny words leverage vastly opposing claim scope. Further, courts have interpreted many other words in weird ways that can be a trap for the unwary.

How to establish a strong patent strategy

To ensure that your business avoids any issues as seen in the example above, be sure to leverage these five steps.

1. Hire a skilled patent attorney

Trying to save money on patent approval or enforcement just for the sake of the financial impact alone is poor planning. Don’t do it. The fact is, not paying for the critical review and legal costs to create or enforce a patent almost always ends up costing more in the long run. That specifically applies to who you hire to draft and submit your patent application.

It is understandable to assume that all patent attorneys are equally proficient in drafting patent applications. However, there is truly a broad range of effectiveness within the subset of lawyers qualified to do patents. It is therefore critical to carefully vet a patent attorney’s track record with an intense focus on that attorney’s historical data to ensure good results.    

Startup founders will inevitably end up paying more in total costs and time with lawyers that are less proficient at drafting a patent application. They may also disastrously opt to draft the patent application without legal help believing this will yield financial savings. Unfortunately, both scenarios carry high probabilities of compromised scope of patent coverage and can create delayed issuance of the patent filing for years due to extra rounds of argument.    

It is absolutely crucial to choose a seasoned patent attorney who is willing to provide both a realistic timeline as well as a realistic probability for success and an ability to enumerate the necessary legal requirements for a particular patent. As mentioned previously, the wording of the patent is the cornerstone of the patent’s scope. Investing in a high-quality legal expert to draft the patent is paramount.  

It should be noted that technically trained and licensed patent agents can also legally draft patent applications without needing a law degree. Their performance, experience, and technical familiarity should be vetted in the same way.  

2. Broader patent protection for key products

As a general rule, the fewer patents covering a product, the easier it is to design a competing product around that protection. Large corporations are aware that, in most cases, a single patent cannot effectively protect an invention or product. For instance, phone manufacturers typically have hundreds—even thousands—of patents that apply to a single phone model. 

Startups constrained by tight budgets may lean toward economizing with a single patent for each product. A wiser strategy—especially for key revenue-potential products—includes a portfolio of patents protecting the product’s various unique functionalities and component parts.

Initially investing across a broad technological landscape securing multiple patents ensures a more difficult and expensive challenge for competitors to uncover design-arounds for each of the unique patents with any knock-off. This also bolsters the options for a startup to commercialize by licensing several parts of its product or spinning out less strategic areas.

It is fundamental that the enterprise prioritizes patent protection budgets toward future perceived portfolio value. Proper alignment between the patent portfolio and revenue is financially savvy.  Additionally, this initial investment creates the opportunity for continuation applications to obtain more patents thereby expanding protection as a product finds more strategic relevance in the enterprise.  

3. Market-driven strategy

The development of a patent strategy involves the careful consideration of various global markets. Many startups are understandably eager to patent their inventions internationally without due consideration.  However, seasoned enterprises tend to grasp that it is simply overkill to register a patent in every market. Not only is this cost-prohibitive and commercially unwise, but it is more strategic to map out protection early in the game. A shrewd and calculated approach considers the most relevant markets—manufacturing locations, customer use, competitor footprints—to block serious competition worldwide.

A good “rule of thumb” is to file patents exclusively in key markets with reasonable protection of receiving an enforceable patent which will secure at least two-thirds of the future product revenues.  Securing the essential European hubs,  (i.e., France, Germany, and the UK), makes it almost impossible for a competitor to release a contending product in other European countries without traversing protected markets. 

This master plan also requires a startup to continuously calibrate its patent portfolio in assessing when to halt the maintenance of a patent in a market that is unprofitably overcrowded or where demand has fallen and is unlikely to rebound.

4. Monitor patenting activities of competitors

Beyond building their patent portfolio, sophisticated companies continuously monitor competitor activities for several reasons. Large enterprises monitor their competitors’ patent portfolios to identify attempts to undermine their own patent protection and proactively initiate actions to challenge or invalidate their competitors’ patent program. Patent offices are notorious for missing key roadblocks that should prevent patent protection but do offer ways for competitors to correct those situations.

Competitive patent surveillance serves to identify potential product offerings and new marketing strategies revealing market movement which competitors are attempting to exploit before it may otherwise become known. A competitor who starts filing patents in a new product category or country presumably plans to enter that market. Conversely, patent surveillance serves to keep a pulse on crowded markets and helps to conserve patenting efforts on already-saturated markets.

While startups may lack the resources to monitor the activities of their competitors, they may recruit the services of consulting companies offering patent monitoring services and competitive intelligence as needed.

5. Hire in-house counsel

Large enterprises usually hire in-house counsel to coordinate with innovators. Typically they employ outside-counsel to implement various patent strategies. A strong in-house legal team can be instrumental in aligning business and strategies. However, it is worth the investment of outsourcing expensive outside counsel for more complex tasks such as drafting and arguing with the patent office. While still emerging, a full-time internal resource is a luxury so an outside patent attorney who is experienced with managing and creating strategic patent portfolios can be a substitute until growth justifies an in-house resource.

A serious patent claim against a startup’s key product can be severe enough to create an emergency warranting dedicated in-house counsel immediately. Patent battles can be existential risks and full-time help with the requisite expertise is key. Offering in-house counsel equity is an affordable and practical workaround to secure in-house counsel on a limited budget.

Thinking long-term

The budget constraints inherent to most startups can understandably create the impetus to economize at all costs. However, by adopting the best practices of large and well-established enterprises a start-up protects its most precious asset—IP. A well-vetted initial investment and pragmatic patent counsel ensures that even the smallest start-up can both protect its product and enable long-term commercial growth.   

Hiring a skilled patent attorney lays the groundwork for obtaining broader patents that provide key protections for a portfolio. However, startups do not need to exactly replicate the patent strategies of large enterprises. All they need to do is adopt similar strategies that can prepare them to catapult over larger competitors in time. 

With this strategy adoption, startups do not need to reinvent the wheel. Instead, scale down these efforts to your needs while keeping in mind the need to follow these best practices.  Calibrate your patent filings based on strategic goals, geographical markets, and competitive intelligence. Eventually, explore employing in-house counsel and your start-up will be well on its way to securing a baseline portfolio critical to growing with compounding successes.