Patents as Barrier to Entry
Josh Kopelman (Redeye VC blog and managing Director of First Round Capital) wrote a piece titled Depending on pending… where he argues about the importance of patents w.r.t. barriers to entry vs. focusing on going to market first:
Most people don’t realize that the average software patent will take many years from initial application to issuance. (According to the USPTO, software patents have the longest backlog of any type of patent. In 2005 the backlog was almost four years…and it has grown larger since then).
Given that a patent needs to be issued before it can be enforced, and given that it takes 4+ years for a patent to issue, you can’t really call it an effective “barrier” to entry. Before you can even consider enforcing the patent, your company has already succeeded or failed in the marketplace. And by the time you try to close the “patent door” to the barn, the horse has not only left the barn, it has probably died of old age.
Yes, patents alone won’t do the trick as barrier to entry, but it is part of the barrier to entry equation, and innovation companies must protect their IP, and that is the responsibility of the CTO. The following is the comment that I left on Josh’s blog:
The role of the CTO; to envision, anticipate, create and execute the technology roadmap, and protect the related IP. This is a must do, but must not take your company into a tangent and preclude execution and go to market. Expensive and long process it is, a must do, and at the end of the game, what your company had protected might not be inline with the company’s “new” technology/business direction. But that is the role of the CTO, to understand this… A tricky balance and race, for technology companies and startups.
ceo
Well, there is an important reason for registering patents early on: Investors are more keen to invest in technology companies with registered patents, whatever other values there might be.
Of course, all that counts after that is doing business and sell what customers want to pay for. Too many technology companies don’t understand that new technology very often never finds a commercial use, so the most important thing is to have generally competent people in the company, and management that retains an open mind to the fact that a company needs to adapt constantly.
And yes, I’m CTO, part of the time.