Investors love patents because they not only offer protection against imitation, but often also promise better negotiating positions and higher profits. For the gateWay magazine, patent attorney Axel Karl presents seven practical tips on how startups can leverage patents cleverly for their success, avoid trouble from third-party patents, and keep costs under control.
1. Is a patent worth it?
Rule of thumb: A patent makes economic sense if the expected additional profit from the monopoly position exceeds the costs of filing and maintenance.
Example: In the first five years, companies must budget around 7,000 euros for a German patent application, and 14,000 euros or more for Europe. The additional profit generated during this period should therefore cover at least this amount.
2. Startups: funding from the government
Since 2015, there has been the “WIPANO” program from the federal government. The subsidy is 50 percent (maximum 16,000 euros). Requirements: The company is a small or medium-sized enterprise (SME) and has not filed a patent in the last five years. Additionally, consulting firms offer support with handling the formalities.
3. Free search databases
Inventors are often not alone with their idea. Free search tools are offered by the European Patent Office or the German Patent and Trade Mark Office (DPMA). The DPMA (with a search room in Munich) and patent information centers also offer free searches supervised by experts.
4. Design protection as an alternative
If the external appearance is an important aspect of the product, a registered design can be an inexpensive supplement or alternative to a patent. Without an attorney, design protection in Germany is available from just 60 euros, and a European design (EU) for 350 euros in official fees. Important: the correctly drafted list of goods and services.
5. Put customer benefits into the patent claims!
A patent becomes valuable when the patent claims describe those features of the product that customers particularly appreciate.
Or to put it another way: if the startup protects features that are little or not at all relevant to its customers in their purchase decisions, then patent protection is often not economically worthwhile.
6. Start small: national first filing
More than 50 percent of the total costs of a patent family depend on the number of countries in which applications are filed. However, it is usually still unclear how successful the product will become and how realistic the chances of granting are. It is therefore worth considering filing a national application first, for example in Germany.
With the first decision from the office, startups can roughly assess the patenting prospects. Within twelve months of filing, they can then file follow-up applications in other countries. Founders can optionally extend this period through a central international application (PCT) to 30 or 31 months.
7. Keep an eye on competitor patents
Make sure your product does not infringe any third-party patents. Otherwise, you risk trouble in the form of cease-and-desist letters and claims for injunctive relief and damages. Law firms offer FTO analyses — freedom-to-operate — for freedom to practice. Startups can receive automated and free notifications by email about newly published patent applications.
Axel Karl is a patent attorney and engineer at X-IP with more than 15 years of industry experience, most recently at Cisco Systems. He primarily guides young technology companies at market entry with patents, designs, and trademarks.
The article appeared in the current issue of gateWay.
You can also find more exciting news about startups and the technology-oriented startup scene in previous gateWay issues, the magazine from gate – Garching Technology and Founder Center GmbH.
