CONTRIBUTED BY
Blake William Jackson
blake.jackson@dlapiper.com

Many startup companies want to change the world with their great new ideas – but, in an effort to raise funds, some jeopardize their ability to protect those great new ideas with patents. This doesn’t have to happen. With a little foresight, startups seeking funding can avoid the patent pitfalls.

A typical startup story may go like this: A few entrepreneurs form a startup company because they have developed a great new idea for the next “must-have” product. To raise funds, the entrepreneurs ask relatives, take out a small loan or turn to a crowd-source funding program like Kickstarter. These crowd-source funding sites allow the startup to disclose its new ideas to the public and raise funds by allowing anybody to give money to the startup in return for some small benefit. Such small benefits can be anything the startup chooses, ranging from promotional items, to a beta product the startup is still developing, and even to pre-sale orders of the finished products whose development is being funded and that will eventually be mass marketed.

After its crowd-source funds dwindle, the startup then looks to more substantive investors to grow the business. It is at this point that startup entrepreneurs may first think about patent protection – often because of inquiries from potential angel and venture capital investors. It is also at this point that the startup may learn that it is too late to properly protect its great new ideas with patents. A startup that has reached this point without protecting its patents may pay the price in diminished support from potential angel and venture capital inventors, not to mention the long-term loss of protection that a patent portfolio could provide.
Continue Reading Startups seeking crowdfunding: Avoiding patent pitfalls