The Secret to Patents

Advertisement

When starting a company, many entrepreneurs believe that their ideas are of massive value and they become paranoid that someone is going to steal them. So they spend precious time filing patent applications and hire expensive lawyers to craft non-disclosure agreements to protect their intellectual property. They are crazy.

It is easy and expensive to be granted a worthless patent. The Patent Office does a vanishingly superficial job of looking at the validity of a patent, and the only patent with even the slightest potential of being worthwhile has to be litigated. And that rarely occurs except in the drug industry. I know of no business that has made its mark because of patents.

Think of it like this. A patent is like a giant canon: You can point it at someone but, assuming your business is small, the company in your crosshairs will look at you and look at your giant canon and they will almost immediately make the calculation that you are bluffing. Your canon is not frightening because your competitor knows that, to fire it, you must spend $500,000. That's the cost of a typical patent lawsuit. Perhaps if your company gets massively successful you can play that game but, even then, few do.

If you don't have the $500,000 in extra cash you may as well not have a patent. And if you still think your patents are worthwhile just try to get a lawyer to take a patent-enforcement case on contingency. The attorneys know the odds.

I speak from experience. I held the patent for virtually all the video games that were produced from 1970 through 1978 when the microprocessor updated my patents. We chose not to litigate against anyone who copied us and put our money into our business. We dominated the market and never regretted the distraction of lawsuits and litigation over patents.

Few if any ideas are brand new and ideas, by themselves, are crap. It is impossible to own any idea and patents are, in most fast-moving businesses, a waste of time. Creativity can be learned. It can also be shut off. Spend you money of marketing or on production or on other things that maximize market share.

Last updated: May 13, 2009




Register on Inc.com today to get full access to:
All articles  |  Magazine archives | Livestream events | Comments
EMAIL
PASSWORD
EMAIL
FIRST NAME
LAST NAME
EMAIL
PASSWORD

Or sign up using: