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By Alex Polyansky Feb. 8, 2019

The Business Case For Why Founders Invest in Patent Pending

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As a startup founder, you might have come to that fork in the road where you wonder whether to file patent for an innovation. Admittedly, filing patents comes with numerous benefits but at the same time requires a high level of commitment.

In this article, we take a look at how a startup could instead focus on getting patent pending status for inventions and use it as a marketing strategy. However, before we get started, we need to understand the difference between patent and patent pending.

Patent vs. Patent Pending

A patent refers to a type of intellectual property (IP) protection that allows an inventor exclusive rights to the production, use and sale of a product or process. When one gets a patent, it means that the invention becomes their property. Anyone wishing to use it in any way will therefore have to seek the owner’s consent or risk facing legal action.

On the other hand, patent pending alludes to the status of a patent application, denoting that the inventor has filed for a patent, i.e. a provisional application suffices. However, as the word “pending” implies, the application has not yet been approved. In essence, a product with a patent pending label is not yet patented.

Why Founders Love “Patent Pending”

For one, filing a non-provisional patent requires a significant commitment both in terms of time and financial input. On average, getting one non-provisional patent application through approval is a 50/50 shot, it could take four to five years or more, and it will cost about $20,000 to $30,000 in the US alone, and could be as high as $100,000 if filing in two or three other jurisdictions, i.e. Europe and Asia. When >90% of startups fail and most of them when they run out of money, what are the odds your startup survives to see the patent actually issue?!

What most innovators fail to realize is that getting a patent pending via the provisional patent application route is a much simpler, more cost effective process, and it holds tons of advantages that a startup founder can leverage. To start with, getting the status requires only a nominal fee. Compared to filing a full blown non-provisional patent application, this is a much simpler process.

A provisional patent application can be successfully completed by founders with fairly light effort. It does not include writing of claims or fleshing out inventorship details. Furthermore, the application does not get examined and remains stealth for the entirety of 12 months. Startups and universities have been known to file PCTs to extend the original filing date.

That notwithstanding, in order to make it a high quality submission, best invention disclosures are deep and complete, establishing the founders’ expertise and explaining the concept behind the invention. Consequently, it is a highly valuable document that startup founders can leverage for numerous benefits.

Benefits of Patent Pending via the Provisional are the same exact as that through any other filing PLUS:

  • Useful as a Marketing Asset

Among the top benefits is the fact that it can serve as a valuable marketing asset. Venture capitalists and corporate partners have demonstrated a preference for startups with patent pending innovations. As such, it is much easier to impress investors when you have provisional patents for inventions.

  • Validation for Your Innovation

Holding patent pending status is often perceived as validation for your innovation. It gives you an edge over competitors and makes it easier to engage corporates.

  • Increase Startup Valuation

Every startup founder is keen on employing strategies that increase valuation. Startups with the highest chance of success have taken advantage of the provisional filing process. Considering the ease of getting a patent pending, forward-thinking entrepreneurs create patent portfolios for all pending applications.

  • Keep it safe and secret

The provisional patent application never gets examined. Founders have been known to refile these applications after the one year to start over. And, they have been known to file PCTs, which in essence buys an additional 18 months for a nominal cost for a total of 30 months of stealth.

Make Patent Pending Work for You

To have a go-to-market edge, savvy founders have focused all their energies on getting a patent pending status, and you can make it work for you. In our practice, we have noticed an increase in provisional filings drastically increases the chances to be noticed by larger corporates. The main advantage is that they have the resources to cover application costs and survive the four to five year waiting period even if the patent application is ultimately rejected. Large companies have the higher capacity to deal with rejections from the patent office, and the fallout if there is an infringement suit with a troll or a competitor.

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