By: Greg Kirsch
Tech startup companies often rely on patents and other types of intellectual property (IP) rights to help safeguard against competition, protect their investors and increase their chance of executing on their business model.
However, in many cases there are fundamental misunderstandings among the individuals and companies who invest in startups as to how to best use IP rights. Either the wrong attributes of the startup’s products and services are protected, or IP is forgotten altogether.
There is no better way to learn how best to protect and exploit IP than by examining the successes — and miscues — of others. Here are two stories based on the real-life experience of practicing IP law for almost three decades.
True Story Number One: The Bad Investment
How an investor may ask IP questions, but not the right ones
About 10 years ago, I received a call from a general partner at a well-known VC firm. The firm had recently made a large investment in a startup, which we’ll call “Acme Corp.,” which had a large patent portfolio. My friend wanted me to take a quick look at the Acme patent portfolio.
My first thought was, “Why is he calling me after the investment has closed, rather than before the investment was finalized?” Nevertheless, I told him I’d take a look.
The patents looked interesting and appeared to cover a technology (“Technology A”) fairly well. A few days later, I called my VC friend back. I walked him through Acme’s various patents, including some of the patent claims, which specifically define the invention covered by the patent.
“Are you sure that’s what the patents cover?” he asked, completely surprised by the nature of the patent portfolio owned by the company in which his firm had just invested a large sum of money.
The investor explained that Acme’s current business model was completely based on another technology, Technology B. They used to have products that used Technology A, but had pivoted away from that business three years prior.
Read more >> https://hypepotamus.com/community/two-cautionary-true-stories-patent-law/
