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Should I Protect My IP Before I Try To Build My Product?

Q: I’ve got a software startup that has a novel approach to solving a market problem. However, the solution stems from the nature of the process, not from the code per se. In terms of trying to finance the venture, would this necessitate getting enough funding to be first to market and just try to grab validation/market share before the copycats (especially those with deeper pockets) come around, or is there actually IP that can be protected within the design of the process?

A: (Brad) As a deep cynic about software patents and IP protection around process technology in software, my short answer is that it’s better to go build the product (and the business) rather than spend your limited time and resources on the IP protection.  My position is not a uniform one – many people would encourage you to put real energy and time into trying to protect your IP before you build the product. 

In almost all situations I’ve encountered, I encourage the entrepreneur to just go build the thing.  I continue to be amazed that the number of entrepreneurs searching for money who want me to sign a non-disclosure agreement before they will tell me what they are working on, or who think they have a truly novel (and non-obvious) approach to something where the patent is the key to the long term value of the business.  There are lots of ways to protect your software ideas – the best way to do it is to get on with building something that it truly valuable for your customers.

May 23rd, 2008 by     Categories: Intellectual Property    
  • http://jeremystein.net jeremy

    ive said it before, but ill restate it here. patents don't really provide the protection that people think they do. theyre expensive, take years to go through the system, and being granted one doesn't really mean much– it still has to hold up in a court of law (and you have to spend even more time and energy trying to defend it). having a patent doesn't mean you will have a successful business. you should build the product, gain traction, and if the time is right, start looking into protecting ip. the ironic/hypocritical reality is that its to your advantage to file as many patents as you can! confusing, i know…

    • Ken

      I think that you may be somewhat short-sighted about the real reason for establishing priority of an intellectual property. It isn't a matter of winning in court to battling each copycat that attempts to seize your idea or concept. This would consume endless time and resources that are badly needed for most startups. You do battle to this with a better market strategy.
      It clearly is a matter of when your well designed concept reaches the successes that exceed your hopes, you can be sure that someone 'else' will challenge your entire business success because they will pay the simple patenting fees after the fact, and you will spend your life in court “defending” your rightful expression of your own unique ideas. Hence, I give you “Edison's lunch-bag”, with a note to his future wife which had mention of his new light bulb, and the date. This was enough to convince the court that it was his 'first'.
      So either brown-bag to work or pay the fees to establish your priority. Without that, you are a sitting duck.
      Ken, The IRMA Project, New York

  • http://www.feld.com Brad Feld

    Josh Kopleman has a great post up at http://redeye.firstround.com/2008/05/depending-on…talking about his Half.com patent that just issued today – 7 years after he sold the company to eBay

  • http://www.jay.fm Jay Levitt

    Q: Should I patent my idea?

    A: Which is the scarce resource: your idea, or you?

  • http://aspergen.blogspot.com Abraham Si

    What if you spend all the time implementing the software, lauch it and someone send you a cease and desist letter? Wouldn't all your effort go down the drain if you don't do the IP homework first?

    • Jason Mendelson

      The problem is anyone can send you a cease and desist letter and anyone can sue you for any reason. Even if you were to do an exhaustive search, chances are that you'd not be able to find anywhere close to everything out there that someone might want to sue you on. Most of the suits that we've been involved with were created by plaintiffs that even if we had known about their IP in the beginning, we still wouldn't have done anything differently, as to us they were completely different inventions.

  • Jay Levitt

    @Abraham: I think you'd be prior art, then. (But IANAL.)

  • Saul Lieberman

    Thanks, Brad and Jason.
    Are you also willing to say that the lack of a patent will not adversely affect a startup's funding prospects?

  • Jason Mendelson

    I am willing to say that within the boundary that if you are dealing with hardware this answer might change. Also, if you are seeking early staged funding, most VCs are happy to help work with you to define your IP strategy.

  • http://chrisyeh.blogspot.com Chris Yeh

    Also, the question shows a lack of understanding of patent law.

    Your invention is protectable up until the moment of first public disclosure. Talking with VCs certainly doesn't count.

    Even after first public disclosure, you have 1 year to get your patent in the US.

    There is an issue of priority–if someone else comes up with the invention independently, the patent goes to the person who files first (as was the case with Alexander Graham Bell, who filed his telephone patent just before Elisha Gray filed his). But if you're worried about the competition, far better to spend your time working on your product rather than waiting for a patent to issue.

    • Josh

      I was wondering what the process was for showing Business Plans to VC'S…, are you saying there is automatic protection? So there is no fear of showing a business plan to a VC and them stealing your idea, as unlikely as that may b e?

      • http://www.jasonmendelson.com Jason Mendelson

        There is no “automatic protection” rather, VCs can’t stay in business if they steal ideas. Plus, they don’t run companies, they hire others to do so, so they have no way to start the business.

      • http://chrisyeh.blogspot.com Chris Yeh

        Jason is right; VCs that steal ideas develop a bad reputation, though it does occur. I experienced this myself with one of my startups.