"Unless a product is new, captures the imagination of the people and creates value, it is lacking its appeal to the public at large." Now let us dig deep in this statement. It becomes all the more clear that regardless of the size of the organization, big or small, the relevance of innovation cannot be neglected. Secondly, innovations safeguarded by patents will be having a far reaching comparative advantage for an organization than its peers. Understandably, patents have a far greater reach to protect the inventions and add value in terms of revenue.
If startups are created with an intent to be ‘tech heavy’ in its offerings, patents become all the more crucial. Patents effectively grant the right to exclude others from practicing a claimed invention. A well drafted patent directed to a novel and non-obvious invention can grant a startup an effective monopoly.
If observed carefully, almost all innovations are built on earlier innovations, and larger companies usually have patents that cover the earlier innovations. Thus, patents can act as a shield for small startups and can protect them from larger companies from knocking out their technology. In addition, patents are critical to the ability of a startup to raise money. Even if a startup’s business fails, the patents will survive. Investors can sell the patents to companies that were more successful.
But startups typically do not have the time or money to protect or prosecute their IP. Talking of even an M&A scenario, if a small company has no formal protection associated with their technology, many large companies will hesitate to acquire them for fear that the small company may be (knowingly or otherwise) infringing on another third-party’s IP.
In addition, unlike startups, big companies have the time and money to prosecute and protect their patents and other intellectual property assets they acquire. Thus, the same patents can be relatively worthless in the hands of a fledgling startup and extremely valuable as part of a big companies IP portfolio.
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