Are patents important to start-ups?

In my opinion, there are only three times when patents are useful to startups:

1. There is a hard computer science (or other) problem at the very core of your product or service -- one that you have solved, that competitors have not, and that gives you an advantage. Further, the answer to this problem, once known, is easily replicable. The canonical example of this is Google/PageRank, and the closest non-software analogue is drug research. This is what software patents are designed to protect and they usually do an ok job of it.

2. You are growing into a large business and you have reached the point that you are attracting attention from patent trolls and other large, patent-holding entities. At this level, the quality of the patents usually doesn't matter nearly as much as the quantity. It becomes a "my stack is bigger than your stack" type of negotiation, and having a very large pile of manure is useful because people are forced to assume there is a pony or two in there. If you want to see an example of a company that has recently had this realization, look at Huawei and compare their total number of issued patents with their total number of patent applications.

3. You are inventing a completely new type of hardware device and you also file for patent on the software that interacts and enables it.

Thus, if you are a startup, then (IMO) it rarely pays to file for patents unless you a) expect to get really big, or b) want to sell out to a big company. This is a special case of #2. Otherwise, execution trumps IP. Startups are just not big enough to worry about (or be targets).

It also may pay if you are creating a completely new market - think RSA. This is just a special case of #1.

No, I don't think so. My experience, having filed patents for fairly large companies with very well-respected IP attorneys, is that the process takes 6+ years to complete. That's probably outside the window of execution for most startups, and certainly outside the window of planning.

Furthermore, patent litigation adds a 1-2 year delay to resolving IP issues, and, in the event you actually litigate, adds a 6-7 figure price tag to the event.

With a very few exceptions, most startups proceed as if patent licensing issues were approximately the same kind of risk as lightning strikes. You would have a hard time convincing most savvy founders that any package of patent licenses was going to protect them from lightning strikes. Just having to go to court is a game-ender for most.

Patents are a marketing asset for startups and little else. There is only marginal value in marketing the patents you've merely licensed.

Interesting comments, thanks everyone.

So, is it that generally start-ups just don't patent?

We've discovered two main things: Generally when companies start getting traction, they become a target for patent suits (i.e. Foursquare). Secondly, for start-ups that do have patents and end up going under, their IP is often sold to trolls and eventually can circle back around to hurt other start-ups.

We want to help stop this by building a crowd sourced defensive patent pool, where everyone who does have patents comes together and agrees they will not assert against each other. Assuming start-ups have patents, is this not something they want? Or do we not have the right model?

You can't avoid them, you won't be hassled for using them, and it's rarely worth your money either fighting bad patents being used against you, or filing your own patents.

Your idea is good, but unless you get IBM, Google etc on board it won't be many patents. Patent trolls are invisible till they start to money-grab, and would never join. It's a bit anti-capitalism, so good luck, please do succeed.

Coincidentally I was watching this video from Google I/O yesterday where someone asked Joe Kraus a very similar question and his answer was a clear no.

http://ontwik.com/startup/how-to-get-your-startup-idea-funde...