Startups Beware: Patents are Like Umbrellas. False Confidence.

For startups, patents are nice to have, but not if you trust them to really protect you. In that they’re like umbrellas. Good protection in a drizzle. False confidence in a downpour.

I write that because I’ve read about 50 real startup business plans in the last two months, and I’ve gone through at least two dozen pitch presentations, and I think it needs to be said.

Patents are usually better than nothing. I like it when a startup has a patent portfolio already issued, but also promises to keep trade secrets very tight and has a budget for patent defense. I like it more when they have a letter from a patent attorney talking about coverage and defensibility of the patents.

I hate it when the startup says a patent has been applied for, or there is a provisional patent, and says (or implies) that therefore their business is defensible.

Having a patent doesn’t mean much anymore. A provisional patent, less. And having applied for a patent, even less. The world of high tech is littered with fallen companies that were smashed to bits by a large company getting around, or violating, their patents. It happens all the time.

Sometimes I feel better with a strong trade secrets policy, a fast ramp-up, and great marketing, which I think offer the best real protection against copycats.

I suspect that the patent system is broken. Some bad patents that should never have been issued feed the coffers of patent trolls. And good patents are hard to find, slow to get, and hard to enforce. Sure, they’re good to have. But don’t trust ’em.

(Hat Tip to Twitter simile contributors @pierzy, Joel Libava (@FranchiseKing), and Dan Ness)

(Image credit: istockphoto.com)