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  • last updated : 21 October, 2022

The Advantages of Patents for Technology Startups

Category: Blog
advantages of patents

Do you have a brilliant idea? Or tried out a neat little prototype based on an innovative concept. Are you looking forward to its release? Keep your cool! First, you must safeguard your intellectual property (IP). This blog will go over the various advantages of patents and how they can help technology startups stay competitive in the long run.

Software development takes years of dedication and hard work. However, once its attributes are well-defined, others will find it easier to replicate the software using a different language or platform. Software copyright can only safeguard software code replication. However, if an exactly similar software code is independently developed, the copyright does not protect it. Furthermore, it does not protect the delicate nature of the idea, core processor, or the functionality of the software. 

This is where “Patents” enter the picture. 

Patents are essential in determining software and process protection. It contributes significantly to the success of small businesses and startups, especially technology startups. Patents grant the owner exclusive rights, restricting others from producing, distributing, or selling the patented invention without consent. The Smart Side of Patents explains how patents can benefit startups. This blog demonstrates how patents help start-ups become more innovative in order to reap the greatest benefits. According to one study, patent approvals help startups innovate, increase their sales, generate employment, and succeed. Patenting may appear to be a significant expense for a tech startup, but it can be an asset in many ways due to the numerous amazing patent searching tools and techniques. 

Advantages of Patents

The following are some of the various advantages of patents that can assist technology startups.

Preventing Competitors from Using Your Property 

Patents prevent competitors from exercising the rights granted to the patent owner. The threat of patent litigation is both costly and serious. It can occasionally exceed a million dollars. It acts as a deterrent to competitors who are concerned about patent infringement. Even if the patent does not generate a profit or improve your company’s brand persona, it does give you the freedom to operate your startup by preventing potential competitors from imitating the patented software or product. Needless to say, a perfectly patented technology, business method, or service can provide a significant competitive advantage to the startup and serve as a brand for the company’s success. 

Aids in attracting investment 

The value of the patents that protect the startup company’s key technology is sometimes used to determine its valuation. A patented software or business methodology gives you an advantage during venture capital investment company evaluations. A strong patent portfolio can aid in attracting investment. It is considered one of the important advantages of patents. Startup companies are frequently valued primarily on the value of the patent applications that protect the company’s key technology areas. A patent or even a patent application gives you a competitive advantage in the market and can thus give your company an advantage when being evaluated by venture capitalists. 

Aids in the formation of a partnership 

When access to third-party technology is required, patents can be very beneficial in demonstrating the startup company’s technological credibility and leadership. It is an important factor in enhancing the image of a product or a company. Furthermore, it provides a strategic advantage by strengthening negotiation positions for cross-licensing, agreements, deeds, and other collaborative deals. 

Potential to generate revenue from licensing 

One of the most important advantages of a patent for a tech startup is the potential to generate licensing revenue. The patent owner can easily grant a license to another party to allow the licensee to use the patent rights without infringing on the patent’s claims. This is particularly true in the case of patents on technological innovation, where several competitors require patented technology in order to improve their products. In addition to monetizing patents through licensing, patents can easily bring in revenue through damages and settlements obtained through the patent litigation process. 

Consider this if you are a startup company: 

Delays in your patent application process, as well as application rejections, will have a negative impact. Every delayed patent application reduces startup employment growth by 21%. If this trend continues for another five years, the sales graph will drop by 28%. With each year that passes, the startup’s public prospects are cut in half. This is why tech startups that provide services and products such as cloud computing, big data services, and online project management tools must be fully patented before going live for end-users from their Beta Version. 

Conclusion 

Patents are regarded as monopoly grants that are valid for a period of 20 years. During this period, no one except the patent holder is permitted to use the technology incorporated in the patent’s claim. Needless to say, patents are an important part of a technology company’s intellectual property portfolio. Your company’s patent portfolio opens the door to various investment opportunities from venture capitalists and investors. Startups can profit from their patent portfolio by licensing the patented product, software, or technology to third parties. Not to mention, protecting and investing in intellectual property assets is critical to generating potential revenues, providing investor comfort, and establishing business credibility for startups. 

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