There are exceptions to ever rule, but generally patents are (1) not incredibly important in software (2) solving a question that's secondary.
The biggest risk to building a startup isn't "can I build this thing" (feasibility risk). It's "will people even care if I build this thing" (value risk) then "can I do it in a way people use" (usability risk). Patents help solve business risk, but that's generally considered to be the 4th (and last) of the risks.
There are exceptions where patents do need to be filed first or the business viability dies. However, I generally assume that if you've addressed value, usability, and feasibility risks to create something truly meaningful, your competitors will find a work around to deliver the same value, usability, and feasibility without infringing on your patent. Thus, patents, are nothing but a minor inconvenience. In some cases, the public filing of a patent, can give your competitors a leg up on competing with you.
Go read The Founder's Dilemma by Wasserman. It's great and covers almost any problem a founder will run into. To really summarize, it's all about trade offs and prioritization. Patents vs trade secrets fits nicely.
Trade secrets are far cheaper and easier to maintain than patents. In short, patents are only as strong as your ability to enforce them. Also Alice Corp. v. CLS Bank International (2014) weakened software and process patents. That said, if you can’t realistically defend IP in court, you effectively don’t have it. From an early-stage founder perspective, that makes patents a questionable use of time and money and potentially what kills the company.
This may contrast from information you get from a lawyer or VC. Patents are attractive because they create an asset someone else can later buy or defend. For the founder, the incentives aren’t squarely aligned.
Neither approach is more right or wrong, but there are very real practical consequences. If you are pre-seed who is bootstrapped or done a family & friends round and are pre or early revenue, trade secrecy is by far your better option.
As an additional note, if you don't own the underlying AI models and are just a better wrapper for Claude or ChatGPT you at best have a very weak IP or patent position.
From what I have seen, early investors care far more about speed, adoption, and clarity of problem than provisionals. Patents help later, but at pre-seed/seed they rarely change a decision unless IP is the product. Shipping and learning usually wins.
Typically not much, but in practice if you truly have a unique technical moat it's easy enough that I'd get a provisional patent in place just in case.
I would start accumulating patents at a gradual pace at around $100m ARR in preparation for IPO, assuming that you feel that is in the cards.
What are you delivering? A physical product into someone's hands? If so, a patent can make some sense. If not, don't bother - patents for software are rarely worth the paper they're printed on.
If you're in the US, look into relevant court cases[0][1][2]. The courts tend to hold that algorithms are not patentable - what is patentable would be an invented machine which uses a software algorithm as one of its components. But even then, the machine needs to have some other inventive, patentable physical component.
(This sort of thing tend to confuse people since, the US patent office doesn't check for patent validity before granting patents. So there are a lot of companies that own invalid patents which have simply never been challenged in court.)
If you live elsewhere you should look into the laws of your local jurisdiction, but many places have the same or similar legal doctrine.
Could make sense to file provisional patents, just to be able to say you have them. Expect no one will actually look at them. And remember that if you don't file a follow up within a certain time, they die.
I work in IP. You can easily operate without patents. Patents cost money to file and maintain. Most patents exist only for marketing purposes. Enforcement also isn't cheap. So, unless the IP is perceived to be highly valuable, corporations don't bother filing the patent. Only a fraction of what's patentable ever gets patented.
Well, there’s also the fact that some organizations actually tie career progression to patents authored by the company. My brother works for a company that offers multiple technical career pathways to promotion, and one of them is essentially “obtain a software patent”
There are exceptions to ever rule, but generally patents are (1) not incredibly important in software (2) solving a question that's secondary.
The biggest risk to building a startup isn't "can I build this thing" (feasibility risk). It's "will people even care if I build this thing" (value risk) then "can I do it in a way people use" (usability risk). Patents help solve business risk, but that's generally considered to be the 4th (and last) of the risks.
There are exceptions where patents do need to be filed first or the business viability dies. However, I generally assume that if you've addressed value, usability, and feasibility risks to create something truly meaningful, your competitors will find a work around to deliver the same value, usability, and feasibility without infringing on your patent. Thus, patents, are nothing but a minor inconvenience. In some cases, the public filing of a patent, can give your competitors a leg up on competing with you.
https://www.svpg.com/four-big-risks/
Go read The Founder's Dilemma by Wasserman. It's great and covers almost any problem a founder will run into. To really summarize, it's all about trade offs and prioritization. Patents vs trade secrets fits nicely.
Trade secrets are far cheaper and easier to maintain than patents. In short, patents are only as strong as your ability to enforce them. Also Alice Corp. v. CLS Bank International (2014) weakened software and process patents. That said, if you can’t realistically defend IP in court, you effectively don’t have it. From an early-stage founder perspective, that makes patents a questionable use of time and money and potentially what kills the company.
This may contrast from information you get from a lawyer or VC. Patents are attractive because they create an asset someone else can later buy or defend. For the founder, the incentives aren’t squarely aligned.
Neither approach is more right or wrong, but there are very real practical consequences. If you are pre-seed who is bootstrapped or done a family & friends round and are pre or early revenue, trade secrecy is by far your better option.
As an additional note, if you don't own the underlying AI models and are just a better wrapper for Claude or ChatGPT you at best have a very weak IP or patent position.
From what I have seen, early investors care far more about speed, adoption, and clarity of problem than provisionals. Patents help later, but at pre-seed/seed they rarely change a decision unless IP is the product. Shipping and learning usually wins.
aligned. And that is also what i am focussed on. But a friend suggested this as an optionality and I am wondering if it makes sense.
Typically not much, but in practice if you truly have a unique technical moat it's easy enough that I'd get a provisional patent in place just in case.
I would start accumulating patents at a gradual pace at around $100m ARR in preparation for IPO, assuming that you feel that is in the cards.
Makes sense (do believe something big is on the cards). As a micro-entity, filing fees are nominal, so I guess it doesn't hurt.
What are you delivering? A physical product into someone's hands? If so, a patent can make some sense. If not, don't bother - patents for software are rarely worth the paper they're printed on.
Why do you say so? Software patents are rarely guarded? Or something else?
If you're in the US, look into relevant court cases[0][1][2]. The courts tend to hold that algorithms are not patentable - what is patentable would be an invented machine which uses a software algorithm as one of its components. But even then, the machine needs to have some other inventive, patentable physical component.
(This sort of thing tend to confuse people since, the US patent office doesn't check for patent validity before granting patents. So there are a lot of companies that own invalid patents which have simply never been challenged in court.)
If you live elsewhere you should look into the laws of your local jurisdiction, but many places have the same or similar legal doctrine.
[0]: https://en.wikipedia.org/wiki/Gottschalk_v._Benson
[1]: https://en.wikipedia.org/wiki/Parker_v._Flook
[2]: https://en.wikipedia.org/wiki/Software_patents_under_United_...
In some verticals, like advanced materials or medical devices (outside of consumer/wellness at least), patents are expected.
Could make sense to file provisional patents, just to be able to say you have them. Expect no one will actually look at them. And remember that if you don't file a follow up within a certain time, they die.
I work in IP. You can easily operate without patents. Patents cost money to file and maintain. Most patents exist only for marketing purposes. Enforcement also isn't cheap. So, unless the IP is perceived to be highly valuable, corporations don't bother filing the patent. Only a fraction of what's patentable ever gets patented.
Well, there’s also the fact that some organizations actually tie career progression to patents authored by the company. My brother works for a company that offers multiple technical career pathways to promotion, and one of them is essentially “obtain a software patent”
Yeah, but who wants to be IBM?
You ain’t wrong. My brother works for LargeGovernmentContractor but the thesis is the same as the Broadcom’s and the IBM’s of the world in this regard
really helpful pov.
You might consider a non-disclosure agreement with parties that you need to share things with.
doesn't that put people off? Like in early conversations?
An MNDA is very common. There shouldn't be an issue.