Start-Ups: Get A Patentability Opinion To Help Raise Money

An Article in Schott, P.C.’s IP Law For Start-ups Series
By Stephen B. Schott

“I need money.”

That’s a common complaint among technology start-ups. There are many ways to get money and one tool for convincing investors of any size to invest in your start-up is by securing a patentability opinion.

What is a patentability opinion?

A patentability opinion* is a legal opinion about the patentability of your idea. In it, a lawyer renders a professional judgment about your chances of getting a patent based on a thorough search of patent archives and other sources. An outside patent searching expert usually conducts the search and the opinion is given after reviewing the search results.

Sometimes the search reveals a few things that you didn’t know about. This can be disheartening, leading to a “Someone already had my idea” moment. But in that moment, I try to calm the inventor who sees a negative search result. A few patents, papers, or websites in the general area of your invention can sometimes be a good thing. Working together, we can figure out what makes your idea better than all the others. Generally, after a short while, we identify what makes your invention better and how it improves upon what is known, and that is the basis for a positive patentability opinion. Once you have that positive opinion, you can use it as a fund-raising mechanism and here’s why.

1. The patentability opinion shows that you have a new idea. One of the concerns that your potential investors may have is that your idea has been done before. They hear you saying it’s new, but there’s that lingering doubt. Didn’t Microsoft already solve this problem? Are you really sure that Sony doesn’t already make one of those? A positive patentability opinion soothes those concerns.
2. The patentability opinion shows that you can create an asset before you actually create it. Patents create value in your business. Whether you want to build the next Apple or Facebook, or are hoping to just create a small business that might be acquired later, a patent is the coin of the realm. The businesses that you compete with may steal all of your ideas unless you have some protection. The business that wants to buy your company will want to see that you have patents before making a commitment. And at the beginning stages of raising money, your investors want the assurance that you will be able to secure patents and the value that goes along with them.
3. Although a patentability opinion is not the same as a noninfringement or clearance study,** it gives a sense of your field’s technological development.Having a clearer view of what others in the field think is innovative presents your investors with an overview of the level of creativity in your field. The partial state of the art in a patentability opinion shows your investors the value of your invention relative to your competitors.
4. Securing a patentability opinion shows that you’re willing to invest in yourself.Even though securing a patentability opinion is not as expensive as a utility patent application, it shows that you’re willing to make a financial investment in your idea.
5. The patentability opinion is one of the first steps in building a business founded on your creativity. It’s not the most important step in building the business but it’s a tangible and professional building block that announces your intent to create an intellectual property portfolio, and your investors will understand and appreciate that.

Your patentability opinion, besides giving you and your patent attorney some guidance on how to craft your future patent applications, can be used as a fund-raising tool in the early stages of your growing business. That’s why this simple and relatively inexpensive legal document should be part of your startup’s marketing plan.

If you choose to share your patentability opinion with your investors and potential investors, you might ask your patent attorney to join you for the meeting. He can’t pitch your idea but he can explain how he reached his conclusions and be a voice of support for your inventiveness.

If you have questions, contact me.

* The Intellectual Property Owners Association has a good overview of the types of patent opinions you can obtain.
** These will be discussed in a future article.