I often get asked by people involved in startups whether they should be patenting the stuff they're working on. Many times they recognize their core idea isn't really patentable — it's obvious, it's trivial, or it's been done before — but their investors tell them that they can probably sneak it past the USPTO's overbusy examiners. Investors really lean on entrepreneurs to do this, even though it is very expensive and sucks up time that should be spent figuring out how to make money.
Why do investors want founders to spend money and time on bogus patents? It's not as if a VC fund is going to give you an extra 10 million bucks and ten years' worth of time to use your "defensive" patent to fight off a lawsuit from Cisco or Apple. It's because when your business fails — as most startups do — your investors want to be able to flog your patents to a patent troll, who will use them to extract rent from people who actually make things that people want (as opposed to lawsuits, which is all that a patent troll makes).
For founders, this means that in the very likely event that you fail to make your cool idea into a business the first time round, you will not be able to try again for 20 years, until the patent expires — because there will be a patent troll lurking in the bushes, waiting to bleed you dry if you ever figure out how to make a go of it.
Now TechCrunch's Leonid Kravets publishes research showing that founders are getting wise to this scam, and fewer and fewer startups are filing for patents.
Over the past several years, the average popularity of patents has steadily declined among funded technology startups.
The reasons an individual company may choose to apply for patents can be complex, but key characteristics can have a major influence. A company's industry and investors, for example, appear to be meaningful indicators of their likelihood to apply for patents.
Despite the overall decline in application activity, those companies that have chosen to pursue patents have done so more aggressively than ever. This is indicative of the increasing dichotomy in the marketplace, in which some thought leaders are actively speaking out against certain types of patents while patent portfolios are being bought and sold for lucrative amounts.