Patenting your idea can boost value, credibility
One of the most difficult decisions for any startup is how to protect the idea or invention that is crucial to your business’s success.
How soon do you tell others what you’re doing? When do you reveal the product to the public? And in cases where you believe your technology is groundbreaking, do you hire an intellectual property (IP) attorney and file for patents?
Ilesfay found itself in the latter debate in 2011, two years after my partners and I created computer code that revolutionized the speed at which data could be transferred between locations.
My partners and I worked together at a local IT services firm in Reading, specializing in machine design for Fortune 100 companies. We’d noticed a frequent problem happening with our clients. When knowledge workers updated a design, even with the smallest amount of changes, it was incredibly difficult to transfer the new data sets.
It could take days or weeks between each iteration for the data to be transferred, slowing important decisions from being made.
After we learned of cloud computing in 2008, a technology evolution bound to provide efficiency and cost savings to corporate IT departments, we built an algorithm that could speed up the process of data replication by only transferring the new data that’d been created. We called it MatchMaking®. For Fortune 500 companies with terabytes of data, our new tool could be a powerful way of preventing downtime in the case of a power outage or for moving along projects that required large and (traditionally) costly data transfers.
Our software platform, delivered via the cloud, would compete against the age-old hardware-heavy solutions offered by some of the world’s largest technology companies. Rather than buying hundreds of servers at each delivery site, we could aggregate the cost of cloud storage and data delivery over all of our customers, and allow them to only pay for what was needed. We knew our software could transfer data 10 to 30 times faster than traditional methods.
Legal protection became a key discussion topic as investors decided whether to fund our company.
Patent work had become less of a priority for some software companies and venture capital firms during the economic recession. The legal process was viewed as time-consuming and costly for startup businesses that really needed to be spending time securing customers and sales. A 2012 study by TechCrunch1 showed patent activity among startup software firms declining significantly in recent years. Fewer venture firms encouraged their portfolio companies to spend the tens of thousands of dollars to apply and the months or years to wait for the patent to be secured. Some even believed software patents should be illegal.
Despite those trends, our investors at CincyTech and the syndicate they built, along with our executive team determined legal protection for our MatchMaking technology to be critical to winning customers and adding to our value as a business. With as many companies now touting cloud-based solutions, we could use the patent as a unique marketing strategy and build credibility among technical executives at Fortune 500 companies. A key criterion for a patent application is a well-written document that teaches a patent examiner how the technology works without being too obvious, yet is simple enough for a technical executive to understand and interpret.
We learned after just four months, in August 2012, that our application was the 8,244,831st patent to be approved by the U.S. Patent & Trademark office. Its title is “Method for the Preemptive Creation of Binary Delta Information within a Computer Network.” The fast approval gave us extra confidence that we’d developed something truly novel and with potential in the marketplace. In January 2013, a second patent was approved, supplementing our existing technology.
Legal protection has already helped us get through the pre-vetting process by executives at major international corporations—a large media conglomeration will soon pilot our technology and we recently sat down with a multi-billion dollar data storage solutions provider. When executives at those companies are in the room, they appreciate that we were the first to invent this technology, and that we’ve invested to protect our position. We can also disclose to them how we’re doing some of this innovative work without too much fear that they could take our idea and run with it. A patent gives 20 years of protection.
Last fall, a version of our technology became available on Amazon Web Services (AWS) Marketplace, the online self-service store for cloud software. Anyone can download ZoneSync® and begin taking advantage of our software with just a few clicks.
We’re proud to have invented technology that is truly unique, that is helpful to so many existing and potential customers, and that adds value to our company, providing even more upside to our investors.
If you feel you have technical IP that needs to be protected, here are a few tips to consider:
(1) Get buy-in from your Board of Directors / investors. Pursuing IP is expensive and time consuming, so it’s vital to have all decision makers on board.
(2) Interview IP attorneys. Spend the time to interview a few. Select the one you feel you’d work best with. It’s important you get the sense they’re able to dive deep with you. They must really understand not only the technology, but also the strategy.
(3) Evaluate how the patent fits your business plan. Your IP strategy needs to be part of your overall strategy, not a side pursuit or similar.
(4) Be prepared to wait. The speed at which Ilesfay was able to obtain its patents is by no means typical. It can take years.
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Cincinnati | March 1, 2013 | Chris McLennan