An Entrepreneur’s Guide To Patents

Entrepreneurs very often come across ideas that are revolutionary and one-of-a-kind. Before they go any further, they become terrified someone may steal their idea and look for some sort of protection.

Patents – one of the most common ways to protect an idea or innovation is the first thing many entrepreneurs look to. They costs thousands of dollars and often provide little value for just an “idea”, but people still continue to use them.

In this blog article, I’m going to discuss what patents are useful for, when you should get them, and some of my personal mistakes with patents.

What Patents Really Mean

For some reason, many entrepreneurs think a patent protects their idea or innovation from just about anything/anyone. That’s the least bit true.

First of all, patents take a very long time before they are issued. The examiner in the patent office usually picks up an application 18-24 months after it has been filed.

From there, most patents are sent back to the attorney since the claims made on them are too broad. Factor in the rebuttal process and the average patent typically takes 36 months to be issued.

Did you know 66% of new businesses don’t make it past the first 2 years? It’s scary to know that your patent may be issued well after you go out of business. During the process, your idea or innovation is known as “patent-pending”.

Essentially, an entrepreneur is paying thousands of dollars (typically between $6,000 to $20,000 depending on the type of patent) to have a “non-guaranteed status”.

Patents don’t really mean much for an entrepreneur just starting out. It’s a status for their product or idea, but it doesn’t bring them any tangible return.

When Patents Mean Something

Before launching StatFuse, my partner & I decided to invest $6,000 to get a patent on our algorithm. It seemed like the best idea at the time since we were scared that people may steal our idea.

Until this day, it’s one of the worst investments we have made. Why? Because, we really didn’t need a patent. We were worried about people “stealing” our idea, but ideas don’t mean shit.

It’s the actual execution of the idea and our startup hitting the spotlight that would potentially cause someone to replicate our model. Funny thing is, we are in patent-pending status but still have a company who has copied our idea.

Nevertheless, we can’t stop them from doing what we’re doing. Shows just how much the patent helped, right?

Patents are best looked at as “insurance”. If you buy a beat up car for $1,500…..you really don’t care whether it’s insured or not. However, when you buy a $50,000 Mercedes Benz…..you really step up the insurance package on it.

Your ideas and innovations are the same way. If you’re just starting out and have no sales, you really don’t need insurance for your idea through a patent. However, if you’re looking to pitch to investors, they definitely want to know their $200,000 investment will be insured.

When To Get Patents

As you can see, patents are only valuable for startups in certain times. If you’re looking for outside help such as funding, endorsements, or even bringing on a bigger team…..patents can be helpful.

People want to know their time, money, or image are well-protected. Patents don’t have much face value, but it’s just an insurance package for many.

If your ideas or innovations hit the spotlight and start gaining major traction, getting a patent is a MUST! People love to imitate models and ideas that have shown positive grow.

The best times to get patents are when your idea or innovation are actually going somewhere or when your startup is ready to seek outside assistance.

I Have An Idea, But I’m Still Scared 

Especially after watching the Social Network, we all have this paranoia of people taking our ideas. Patents make us feel safe while we share ideas with others.

I’ve been through that phase and I know exactly how it feels! For the entrepreneur who is really scared to share their ideas without protection, I have a suggestion for you.

You can get subsidies of patents, which are known as “provisional patents”. Essentially, they are an extension for patents.

In any point of time, you get to fill out some documentation outlining your idea/innovation. The provisional patent essentially says that you’re the owner/creator of the idea, but you haven’t gone ahead and filed an actual patent for it.

From that period, you have 12 months to file an actual patent on it. These provisional patents cost less than $1,000 and gives you the ability to develop your product.

Once your product gains traction, begins to work, or even requires outside assistance, you can file for a patent within the 12 months.

Conclusion

Patents have a lot of gray areas that many entrepreneurs don’t understand. When I started out as an entrepreneur, I really overestimated the value of patents.

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