Should Your Software/SAAS Company BUY a Patent?

First of all, I am not a patent attorney, but I do know something about their strategic use.  A recent news story got my attention, as I think it is a great illustration of when to acquire a patent. This could be valuable to any organization in search of growth venture capital or growth equity.  

You most likely already heard of the website Groupon. If you haven’t, then make sure to read about it because it is a very interesting business model. The angle for every software or SAAS company is to learn about how (from my perspective) they are working with patents to beat their competitors. 

Think of it this way, their business model and website is simple to replicate because they essentially have a good idea of how to deliver coupon buying to local markets. The difficulty is they are widely successful, and so copycats are coming into their market really quickly (maybe faster than Groupon can create local market sites). So Groupon, in essence, has a real ‘execution risk’ to their business model…this is where getting patents comes in! 

It looks like Groupon really thought ahead and purchased a patent issued in 2001 that covers some of what they do right now (i.e. they did not file for it, nor discover the invention). They are now using it to fight off copycat sites.  Very wise!

So don’t forget this: even if you don’t have a patent or you think you invented something brand new, speak to a few patent brokers so you can perhaps obtain a patent that covers your technology.

It could really assist you to ward off competitors, particularly if your business model and technology is effortless to replicate = execution risk. Where do you locate a patent broker? Well there are a number of of them, but the leader in this space in my opinion is Ron Epstein.

So long story short, think about the possibility of patents and speak to a patent attorney or broker about them because they can genuinely assist you to distinguish yourself from the pack. Just a few thoughts from a venture capital advisor who works with the OpenView portfolio of expansion stage companies. 

Disclaimer: This post is for educational and informational purposes only, and does not constitute legal advice. Contact your attorney for legal advice.

Jeremy Aber is a Senior Adviser at OpenView Venture Partners.


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