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Getting a patent is not always the right move

original Engineering

Getting a patent is a kind of “given”

For people building business strategy and people launching startups, one of the things most of them worry about is “patents.” Partly that’s because investors and decision-makers almost always ask about patent status, and partly because companies that actually hold a lot of patents raise huge amounts of funding, and research institutions get evaluated to some degree on the number of patents they’ve obtained.

To begin with, a patent is what you file when a technical invention has occurred, in order to protect it as a right. Once something is turned into a right that way, you’re granted patent rights, and you can impose certain restrictions on other companies’ use of that technology. Nearly identical systems exist not just for technology but for designs, trademarks, and so on, protecting intellectual property. It’s a very elegant, gentle idea, and for researchers and engineers, getting a patent is a kind of honor.

None of that is wrong.

For companies that place particular weight on technology, IP strategy matters a great deal. Botch it and you can lose the company in an instant; get it right and you can greatly raise the company’s value.

Everyone knows this, and I agree — over the course of my own career I’ve obtained several patents myself. Even so, here I want to deliberately make the case that it’s “not necessarily the right answer.”

As always, the material here comes from “several different people asking me for similar advice.” So I’m hoping this post will be at least somewhat useful to a variety of people.

Coming up with material is a pain, and repeating myself is a pain, so this is an extremely efficient way of operating. Ha.

On the downsides of getting a patent

Concretely, the downsides of getting a patent are as follows.

1. Filing a patent reveals your broad strategy to other companies 2. It costs money 3. It takes up time 4. What matters isn’t obtaining a patent, it’s being able to litigate over it (which takes financial resources and know-how) 5. Especially for software patents, proving infringement is hard

Let me go through these in order.

1. Filing a patent reveals your broad strategy to other companies

There are sites like this one, for example. iPhone-Mania A site that tracks Apple’s patent filings and speculates about them.

Of course, patent information concerns “seeds” of products that “may or may not ship.” But in the case of utility model registrations especially, information leaks out that lets you extrapolate the product to an extreme degree, so you can often tell roughly where a company’s interest, its target, lies.

There’s a similar story with wireless certification filings. With the FCC and similar bodies, once you file for radio approval and reach a state where the product can be sold, the information gets disclosed on their website. Looking at that, you can predict that some rumored product is about to launch soon. In other words, to gain a public benefit you have to disclose a certain amount of information, and depending on who’s receiving it, that information can be extremely valuable to them.

2. It costs money

Before filing, you need to research similar existing patents and work out strategy together with a specialist, a patent attorney, on how to narrow or broaden your claims. Naturally, that costs money. When you file, you need a patent attorney to prepare the documents. Naturally, that costs money. Filing and registration themselves cost money too. And maintaining the patent quietly costs money as well.

A company developing an extremely high-unit-price product, or one it can sell in very large volumes, might think that’s not a big amount relative to the whole. A large company that has already set aside an annual patent budget might even want to increase its patent count. But for an organization like an early-stage startup, it’s not cheap enough to say “let’s get a patent first” or “let’s just grab as many patents as we can for now.”

3. It takes up time

This one’s especially about startups. A startup never has enough people, never has enough money, and never has enough time. There’s no time to spend on anything but what’s truly necessary. What matters is judging for yourself from zero whether something is truly necessary, rather than doing it because someone else said so.

Given that, when does getting a patent rise to become “one of the top priorities worth pursuing even at the cost of time”? Just to be clear, there are of course plenty of cases where the judgment comes out as “necessary.” I’m not saying don’t file patents.

4. What matters isn’t obtaining a patent, it’s being able to litigate over it (which takes financial resources and know-how)

This one’s for real. Holding a patent isn’t a story where everything’s fine just because you have it. If you’re infringed upon, you have to sue the other party yourself. You might naively think that merely holding a patent exerts some deterrent effect, but the world isn’t polite enough to work that way. Even with something like a design patent, where infringement looks obvious to anyone, people who want to attack will attack hard anyway. If you’re seen from the outside as someone who probably doesn’t have the resources to sue even if infringed, then that patent means nothing at all.

5. Especially for software patents, proving infringement is hard

The basic rule of damages claims is that “the burden of proof is on the plaintiff.” Strictly speaking, this is very difficult, because it’s unclear how much the plaintiff actually knows about the defendant, and internal information isn’t handed over. Even so, you spend money, spend effort, gather evidence, and finally sue, and only then does the dispute begin. I’m not a professional, so I don’t know exactly how much evidence needs to be assembled, but as an engineer I understand very well how hard it is to gather that kind of information. For a circuit patent, if you can get hold of the other party’s schematic, that settles it in one shot, but it rarely works out that way. For a mechanical structure patent, you can tell at a glance that something looks similar, but if the other side argues differences in materials used or their own particular characteristics, it becomes very troublesome. And when it comes to the internals of analysis or software, that’s a whole other level. It’s extremely difficult. It’s impossible to judge from the outside, and making an accusation based on an app’s behavior is also grueling. The generally conceivable approach is something like feeding in the same parameters and getting exactly the same results, but the other side is unlikely to grant you that degree of access. I’m not very familiar with case law, but I do at least recognize that software patent infringement lawsuits often end up mired in confusion.

What matters more than obsessing over the patent race

So far I’ve raised the hassles of getting a patent and the question of whether you really need one. To close, I want to end on a different angle.

Startups set all kinds of goals, but it’s extremely rare for someone to be developing a product in order to win or lose a patent lawsuit. Everyone should be sweating through their daily development work because they want to bring a great product or service into the world.

For example, a friend recently introduced me to an interesting article. It was about how AMD manages to keep fighting against a giant like Intel. https://jp.quora.com/AMD-ha-naze-shikin-men-de-attouteki-ni-masaru-to-omoi-wareru-Intel-wo-ryouga-suru-CPU-wo-kaihatsu-dekiru-node-shou-ka/answers/207102983?ch=10&share=3c0a5c10&srid=7Ndeg&fbclid=IwAR09Ss1iTQaBU3ds-454cYl5XlHK0ymwAWxfW1ziYOiCh8YaP-RiVR8lfUs The gist, I think, is that if you have excellent engineers, there’s a chance somewhere even when you’re overwhelmingly disadvantaged financially. For a startup, it’s normal to never have absolute certainty of winning — could you say that having “some chance of winning” is enough? I catch myself doing this sometimes too, so I have some reflecting to do, but when a young team member brings me an idea, I too often ask, with a smug look on my face, “Could that idea still win even if some Chinese company threw $100 million and 100 engineers at it?” Of course, investors and mentors like me aren’t actually interested in the answer to the question itself. What we want to know is what kind of person answers a question like that. So there’s no single correct answer, and there are plenty of options, such as:

None of these are wrong. What matters is whether that answer fits the entrepreneur themselves. The answers above are the kind of thing you can find in pretty much any startup how-to book lying around, so anyone can say them out loud. What matters is that when what someone says matches their own characteristics, investors can watch over them with peace of mind.

Choose the patent strategy that fits you and your company

Strategy is different for everyone, so just choose whatever fits you. Someone who puts on a brave front with freshly learned patent jargon, saying “our patent defenses are airtight!”, is far less trustworthy than someone who says plainly, “honestly this is too much of a hassle, so we basically want to go open source — giving back to society is probably a better fit for this business.”

By the way, my position and opinions differ from those of investors, bank loan officers, and your boss, so don’t take everything here at face value. Ha.

【YouTube video】

Getting a patent is not necessarily the right answer

Originally published in Japanese at https://clazytech.com/2020/04/355/. Translated with LLM assistance and reviewed before publication.