Piracy of intellectual content isn’t a new phenomenon in Africa. It has been a regular occurrence for many years that creatives have continued to fight against, which is why tech startups also need to explore legal systems for patents. Getting patents for your brand’s intellectual property is a sure way to protect your work from being stolen.
It hurts to see someone present your hard work as theirs and without any credit. If you’d like to drive a creative crazy, do this, and you’d see an entirely different side to them.
Undoubtedly, you might have a little idea of why startups need patents now.
Startup companies are founded on ideas and passion from a person or people who want to make a difference. To achieve success, a startup must come up with a unique plan tailored to attract investment, develop a distinguished product, and also weather the storm in the tough competitive marketplace.
Now, let’s discuss Patents.
What are Patents?
A patent grants exclusive property rights to the owner of any intellectual property. Patents are usually held for some time, during which no third party has legal rights to use, sell or make such property.
Why Tech Startups Need to Explore Legal Systems for Patents
Patents are essential for every tech startup. Even as an individual or Non-practicing entity (NPE), you can patent your idea and related know-how and sell it to technologists with the manufacturing capacity or market channels to manufacture and sell the patented product.
Here are five reasons why tech startups need patents
To Attract Investors
Patents play an essential role in securing seed funds from investors.
The answer is “exclusivity”. A patented portfolio increases a company’s value and the chance for a successful Initiial Public Offering (IPO). It is similar to why a potential customer would desire a luxury service from their favorite vendor. It also gives investors the feeling that the company’s idea is truly one of a kind.
This also assures investors that competitor companies won’t try to steal an idea they are investing their resources into. Investors and venture capitalists want high returns with minimal risk and this is only possible with exclusive and extraordinary products.
To Avoid Legal Complications
Securing your startup’s place in the market ensures that you are not infringing on someone else’s idea. Without proper investigation and registration, another company with legal rights to that IP (Intellectual property) could sue you and win, even if you invented or created that material before the other party did.
When a startup begins to grow, competitors take notice and begin a game of chess to knock the startup out of existence. They’d usually attack with legal battles, and if your startup doesn’t have patents, you risk getting into a lot of trouble.
However, if competitors know that a startup has patents of its own, they will be wary of suing since they know they can be counter-sued.
Patents Provide Better Chances Of Acquisition
Being strategic about your company’s value in the market increases the chances of its acquisition. One of such strategies is getting patents for your ideas. Patented IPs also block the company’s chances of penetrating the market.
For example, Google founders got Google’s Page Rank patent even before they secured a domain name or had a business plan. If they hadn’t done this, Google would have had to face more competition from the likes of Yahoo.
A patent portfolio also increases a company’s value and the chance for a successful IPO. This makes the company a lot more attractive to a potential acquirer.
To Avoid Bullying
It’s not unusual for some companies to use patents to bully their competitors so they can drive up their costs or push them out of the market. Since patent litigation can be costly and time-consuming to resolve, patentees with weak patents will often seek to sue or threaten to sue competitors that pose a threat to them.
Patents Make Room For Prestige Pricing
Prestige pricing is a marketing strategy that allows a company to use premium pricing to suggest superior quality to its target consumers. With premium pricing, a startup can also make a higher profit without necessarily capturing a greater market share.
Therefore, a startup’s patents gives leverage to use the prestige pricing strategy and make consumers perceive a startup’s product or service to be of higher quality.
Summary
We’ve discussed why startups need to patent their idea or a company’s product. If you read through this article thoroughly, you’d know that leaving your product exposed to piracy can have damning consequences.
The worst mistake you can make as a founder is to develop an impressive idea and fail to protect it. You’d be killing your company before it even grows. Don’t wait till your idea is stolen and you will need to fight for ownership rights in court. It will cost a lot of money and stress.
