Reasons to Patent: Increased Net Worth

If you missed last week’s “Reasons to Patent” post, it was all about credibility. Check it out here.

One of the most common misconceptions I come across is that the only way a patent can bring value to your business is through legal enforcement (suing a competitor for patent infringement). In reality, there are many, many other reasons to file a patent that are far more relevant to newer, smaller businesses (such as technology startups).

One such reason could be to increase the net worth of your business. This would be relevant if you are looking to sell your business at any point in the future, if you are looking for investment (the higher your company is valued at, the less equity you need to give up to receive investment, generally speaking), go public, or any number of other situations.

A potential acquirer may be looking at buying your business for your high caliber employees, your contracts with clients, your internal processes or systems, or, particularly if you are a technology company, your intellectual property (IP). Protecting this IP by starting to build up a patent portfolio early on in the life of your startup will greatly increase the value of this IP, especially over time. It also makes it far more tangible. This ultimately improves your ability to negotiate a sale and get a better deal.

The ideal acquisition is one where your business is valued for all of the above reasons, including a patent portfolio with broad claims!

At The IP Link, we help our clients understand the value a patent application might bring to their business BEFORE they start spending tens of thousands or even hundreds of thousands of dollars on their legal fees with a lawyer. If you’re considering exiting through an acquisition in the future (or any other transaction that requires a valuation of your business), then you should start building your patent portfolio now if you haven’t already. The first step towards a full-fledged patent portfolio is preparing a strategy, which The IP Link would be happy to help with!