PartnerVine Fellow Victor Mwago and PartnerVine's CEO Jordan Urstadt speak to their experience with patents in an opinion piece for Nairobi Business Monthly.
Entrepreneurs are usually short on time or money, or both. What’s the best strategy for an entrepreneur to pursue a patent? As technology entrepreneurs from Kenya and Switzerland, we pooled our experiences and came up with three pieces of business advice for entrepreneurs. We hope it will help entrepreneurs pursuing a patent.
Getting a patent in Kenya may safeguard intellectual property in Kenya, but it doesn’t help scale your business against global competition. For industries like software (where we work), the market is global. If your innovation is copied elsewhere and executed at scale, it will be hard to build a successful business in the long term. Economies of scale allow companies to pursue more aggressive pricing strategies, which means companies in larger markets have a natural advantage.
To expand protection for your intellectual property internationally, a cost-effective strategy is to follow the coordinated procedure of the World Intellectual Property Organization (“WIPO”). Kenyan residents are obliged to file their patent first in Kenya. Kenya is a member state of WIPO, and as a result can benefit from WIPO’s coordinated procedure for expanding patent protection to WIPO’s 153 other member states. WIPO’s procedure also includes lower fees for applicants from some countries, including Kenya. Pursuing WIPO’s procedure for patent protection internationally is not cheap, but it is a relatively cost-effective way to expand protection for your intellectual property.
Pick your fights
As software developers, one concern we had to address was why we would patent software in the first place. Patents protect our intellectual property, which gives us some comfort that other companies will not copy our invention. For a small company, a patent also validates our intellectual property, which helps with marketing and should mean an increase in valuation. However, patent authorities generally favor patents for hardware and restrict patents for software that are deemed abstract or not sufficiently tied to a machine. Particularly in the US, where the most software patents have been awarded, the US Patent and Trademark Office has been increasingly likely to invalidate software patents. Those that argue against patenting software recommend putting the time and money needed to secure a patent into building a brand. Those that argue for software patents note that software patents still make a large portion of the patents awarded each year, and you need to be on the field to play the game.
There are many companies that pursue aggressive patent strategies, and it’s worth considering why they do so. Our conclusion is that most entrepreneurs should think twice before following them.
When deciding whether to protect your innovation with a patent, you need to make a decision not just on filing for a patent, but in defending it as well. If you’ve got an invention that would be clearly defensible as a patent, you’ll secure an asset with clear value. For most patents though, inventions are the result of expertise in a field, which means there are other experts out there. Those other experts may think your patent isn’t so new or innovative, and some of them may have deep pockets. An entrepreneur needs to consider the cost of defending a patent. The cost of defending a patent depends on the markets where you are active, but can be intimidating. The high cost of litigation in the US can be particularly discouraging.
The high cost of litigation has led some large companies to aggressively file for patents as a defensive strategy. Last year, for instance, IBM was awarded more US patents than any other company—9,262 in total. By dint of numbers, IBM filed for a lot of patents that other companies would not have pursued, and they did so to deter others from suing them for patent infringement. If IBM didn’t have the financial resources, they wouldn’t be able to undertake such an expensive patent strategy. For a large company, the cost of an aggressive patent strategy looks more reasonable when compared to the size of its revenue.
On the plaintiff’s side, the potential for sizable damage awards has led some companies in the US to aggressively buy patents and sue companies for patent infringement. Sometimes called patent trolls, these companies pursue the flipside of IBM’s aggressive patent strategy. For patent trolls, revenue doesn’t come from the business that’s protected by a patent, but from the litigation itself. That’s a special case that could also be called an aggressive patent strategy, but it doesn’t apply to entrepreneurs using patents to protect their business.
For most entrepreneurs, the cost of pursuing marginal patents is formidable, and pursuing and defending a weak patent is a distraction from growing the revenue of your core business. For an entrepreneur pursuing a patent strategy, it’s important to pick your fights. Filing for a weak patent is probably not where you want to invest your time and money.
Decide on whether you’re going to file a patent early. The earlier you make your decision and file for your patent, the less time there is for someone to publish an article that may make your invention look less innovative. For patents, that’s called ‘prior art’, and it is the background for authorities to consider whether your invention is worthy of protection. Anything published after your filing date won’t be considered prior art. Some of the things you need to do to secure a patent are not favorable for entrepreneurs, but fast decision-making is something entrepreneurs can do well.
Protect your investment
The award of a patent is not a Nobel prize, but an incentive for promoting investment. Patents don’t memorialize a Eureka moment, but protect the time and money required to realize a new idea. The subjects of most patents don’t sound particularly revolutionary, and innovators that don’t work for companies like IBM often don’t think their inventions are suitable for a patent. If you are uncertain if your innovation is patentable, research it and reach out for good advice sooner rather than later.
Patents offer a seat at an elite table where your intellectual property is protected. Pursuing a patent effectively requires not just imagining a seat at that table, but also considering how you are going to stay there. We suggest that entrepreneurs think globally, pick their fights and file early for an effective patent strategy.
Victor is a PartnerVine Fellow and founder of legal technology startup Legal Forms. He is currently applying for a patent. Jordan is the founder and CEO of legal technology company PartnerVine, based in Switzerland.