Patent pains: IP protection proves time-intensive, cost-prohibitive for some startups

Graham Dodge wanted to provide a sense of security for investors backing his crowdsourced sickness forecasting startup Sickweather, but obtaining a patent for the technology proved more difficult than anticipated.

“We just wanted to protect ourselves to build value in the company,” said Dodge, CEO of Sickweather, as well as Garnish Health, an online platform through which members share medical bills. “We had a lot of investors early on who asked us if we had any intellectual property protection. And a patent is a great way to have that IP protection.”

After Sickweather filed for a provisional patent, the application was rejected time and again by the company’s patent examiner, Dodge said.

“At one point, we resigned from thinking that we’d ever get the patent, and adopted the now-popular notion that patents aren’t actually worth much these days — or they aren’t defensible for a startup,” he said, noting that Sickweather, which has offices in Baltimore and Kansas City, spent more than $100,000 through the patent application process.

“It was the office actions and the back and forth with our legal counsel (that) rapidly increased the fees over time,” Dodge said of the costs.

After eight years defending the originality of Sickweather’s business idea to its examiner, the company finally received its patent, Dodge said.

“If you’ve ever seen the movie (The) Social Network — where Mark Zuckerberg says, ‘Well, if Facebook was their idea, they would have invented Facebook’ — it was very similar for us to be able to point to these other inventions and say, ‘If they had intended to build something like Sickweather, they would have invented Sickweather,'” Dodge said, describing how the company overcame comparisons to other, similar tech startups.

Ultimately, he said, Sickweather has found value in the patent protection, though that exact value remains to be fully seen as the startup continues its upward trajectory.

Code in the open
Sisters Carolina (left) and Claudia Recchi teamed up to found EdSights. | Rashi Shrivastava/Missouri Business Alert

Given the complicated process, Dodge said, it seems natural that some investors actually discourage startups from getting patents based on the notion that they aren’t relevant in today’s open-sourced IP terrain.

Claudia Recchi and Carolina Recchi, co-founders of EdSights, tend to agree.

The sisters launched their startup two years ago, using artificial intelligence to increase student retention. Procuring a patent for software-based products like theirs doesn’t make sense, Claudia Rechhi said.

“You are basically showing the code to the public and saying that you can’t copy this, which makes it easier to copy,” she said. “Nothing stops people from changing something very small and coming up with a product that’s almost the same.”

Filing for a patent is like gambling with no immediate return on investment, but it’s the only way to save a company’s product from being plagiarized, said Jennifer Bailey, a software patent attorney at Erise IP, an intellectual property firm based in Overland Park, Kansas.

“I think the tech community is a different breed in the sense that they want to share information. There’s this idea that intellectual property should not be owned by one person,” she said. “But the problem is we have a patent system, and the big companies will take it and use it against you.”

Finding support

Patenting a product is like protecting the recipe for a secret sauce, said Max Younger, co-founder and CIO of Kansas City-based Mobility Designed.

Younger, an industrial designer, devised a redesigned crutch, changing the anchor of support from armpit to elbow. Acquiring a patent for the product would dictate the future success of his product, Younger said.

“One of the barriers for us to enter the market was being able to patent our remodified crutch,” he said. “There’s a lot of upfront investment that goes into developing a product, and in order to have a chance at recouping costs you need to protect your product.”

The task of obtaining a patent began with Younger seeking help from the University of Missouri-Kansas City to fund the patent application costs through the school’s Entrepreneurship Scholars program.

Patent applications can cost anywhere between $10,000 to $20,000, said Bailey. The reason for the intimidating cost: drafting a comprehensive patent for a tech startup requires at least 40 hours of a highly educated patent attorney, she said.

“A patent attorney is the only field of law that requires us to have a science or engineering degree,” Bailey said. “So, for example, one of my associates has a Ph.D. in computer science from a top five school. We’re in a field that requires really smart people, and there aren’t that many of them. And so it’s expensive.”

Though costly and intimidating, procuring a patent is worth the effort, Younger said.

“If you’re not looking at investment or going to sell your company, a patent is not completely necessary, he said, “but if you want to be in the global market and attract investments, a patent is the ticket to market power.”

This story was produced through a collaboration between Missouri Business Alert and Startland News.

Tags:, , , , , , , , , , ,

Leave a Reply

Have you heard?

Missouri Business Alert is participating in CoMoGives2019!

Find out how we plan to use your gift to enhance training and programming for our students