The Patent Power Play: How Intellectual Property Affects Your Startup’s Valuation

Patents and their Significance in startup valuation

The significance of intellectual property in company startup valuations is a crucial concern for both companies and investors. It can guide a startup’s intellectual property strategy and influence funding decisions and startup valuation considerations. Intellectual property is one of the most crucial factors to consider when starting a business. Your intellectual property is what distinguishes your firm and gives you a competitive advantage.

In this article, we will explain the significance of the intellectual property in startup valuation and answer several frequently asked topics. Let’s begin by discussing how patents can drive value creation.

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The innovation factor: How patents can drive value creation

A patent is an example of an intangible asset that can be valued in the same way that a software program, a trademark, a corporation, or even know-how can. A patent provides its owner with a competitive advantage by granting a monopoly and the power to forbid the reproduction of the innovation for as long as the patent is in effect. This gives the owner the ability to prevent others from making the invention. It is a demonstration of seriousness for organizations that provide financing from outside. It demonstrates the potential of the organization, the quality of the leadership, and their devotion to the company.

It is possible that acquiring a patent will raise the value of your business and provide you with additional revenue, provided that an accurate appraisal is performed.

To determine the worth of a patent, it is not required to wait for it to be put to use! Unless a straightforward accounting startup valuation is specifically required, as is sometimes the case.

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Patents and market dominance: Securing your position in the market

For projects with a lot of intellectual property risk, the organization will come up with ways to reduce or get rid of this risk. In many instances, businesses will wish to consult with or hire experts in this field who can help them find practical solutions to their intellectual property protection requirements.

Applying for patents

In the target market, organizations might need to file applications for necessary patents as well as register any applicable copyrights and trademarks. Every target market has its procedures and laws. Organizations can consult a trademark or patent agent or the intellectual property office of the target market for more information on how to register copyrights, and trademarks, and apply for patents in a certain market. The timing of these applications can be crucial once a market has been selected, thus the application process should start as soon as possible.

Creating contractual assurance

Developing contractual safety Organizations may seek to preserve their intellectual property through meticulously crafted legal contracts. Contracts that safeguard intellectual property include the following elements:

Non-disclosure agreements (NDAs) ensure that employment contracts, licenses, sales contracts, and technology transfer agreements protect intellectual property from the start and contain clauses concerning intellectual property, such as a clear ownership provision.

Once the contracts are in place, organizations should engage with their business partners regularly to underline the significance of the terms to the ongoing business relationship and to ensure that the partners fully comprehend what these commitments entail for both parties.

Putting in Place Precautionary Safety Measures

When engaging in a new foreign enterprise, organizations may wish or be required to upgrade their security protocols. This can expedite the identification of unlawful or hostile activities by internal and external parties. Examples of security-enhancing practices include the following:

Performing background checks on important personnel or business partners Limiting access to intellectual property to critical parties, contractors, and supply chain partners Prohibiting unlawful copies of intellectual property, such as on USB devices and shared network drives encrypt everything digitally and electronically transmitted over intellectual property.

Obtaining Insurance

Companies may wish to transfer a portion of their intellectual property risk by purchasing insurance. Intellectual property insurance often protects against the substantial legal expenses that will be incurred if an organization litigates its intellectual property claims. It can encompass both the enforcement and defense of claims. Enforcing claims against infringers that violate the company’s intellectual property Legal costs associated with intellectual property infringement include damages, such as loss of revenues or reputation, and settlements for any domestic or international intellectual property right.

Defending charges of infringement against the organization

This includes both accusations of infringement against the organization and lawsuits against its customers or licensees. Claims of infringement frequently involve copyright violations or other forms of intellectual property theft. The claims are frequently founded on plagiarism, which is when someone steals another’s original work.

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Legal considerations: Understanding the patent protection process

You may need a patent, trademark, copyright, marketing plan, or trade secret to protect your idea. When submitting a patent application, you should determine if you need a patent or another kind of intellectual property protection.

Analyze whether your invention qualifies for a patent.

You will need to know the answers to a few questions to ascertain whether you can patent your innovation.

Who may submit a patent application?

What is patentable, and what is not?

How can I tell whether my innovation qualifies for a patent?

How long is the term of patent protection?

What is the cost of obtaining a patent?

Which type of patent do you need?

Patents fall into three categories: utility, design, and plant. Identifying the type of patent you require as per your invention.

Prepare to apply

Once you’ve identified the type of Patent you require, you can examine your application strategy and whether or not to hire legal representation.

Prepare and submit your first application

Consult the Patent Application Guidelines for the specific legal requirements for submitting the type of patent application you’ve determined to be appropriate.

Work with your examiner

The USPTO will send an Office Action if your application is incomplete. The filing of the application will be timed (a surcharge may be required). If the omission is not rectified within a specified period of time, the application will be returned or otherwise disposed of, and the filing cost will be repaid, less a handling fee as specified in the fee schedule.

Maintain your patent

Utility and reissue utility patents require maintenance payments to be valid beyond 4, 8, and 12 years following the date of issuance. The patent will expire if the maintenance fee and any applicable surcharge are not paid on time.

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Future outlook on the relationship between patents and startup valuation

In conclusion, patents can have a substantial impact on startup valuation. They can offer startups a competitive edge, safeguard their original ideas, and attract investors. Yet, obtaining a patent may be a time-consuming and costly endeavor that demands careful planning. Startups must design effective intellectual property strategies, including the registration of copyrights and trademarks, the application for patents, the establishment of contractual security, the implementation of security measures, and the purchase of insurance.

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Our team of advanced patent attorneys assists clients with patent searches, drafting patent applications, and patent (intellectual property) agreements, including licensing and non-disclosure agreements.

Advocate Rahul Dev is a Patent Attorney & International Business Lawyer practicing Technology, Intellectual Property & Corporate Laws. He is reachable at rd (at) patentbusinesslawyer (dot) com & @rdpatentlawyer on Twitter.

Quoted in and contributed to 50+ national & international publications (Bloomberg, FirstPost, SwissInfo, Outlook Money, Yahoo News, Times of India, Economic Times, Business Standard, Quartz, Global Legal Post, International Bar Association, LawAsia, BioSpectrum Asia, Digital News Asia, e27, Leaders Speak, Entrepreneur India, VCCircle, AutoTech).

Regularly invited to speak at international & national platforms (conferences, TV channels, seminars, corporate trainings, government workshops) on technology, patents, business strategy, legal developments, leadership & management.

Working closely with patent attorneys along with international law firms with significant experience with lawyers in Asia Pacific providing services to clients in US and Europe. Flagship services include international patent and trademark filings, patent services in India and global patent consulting services.

Global Blockchain Lawyers (www.GlobalBlockchainLawyers.com) is a digital platform to discuss legal issues, latest technology and legal developments, and applicable laws in the dynamic field of Digital Currency, Blockchain, Bitcoin, Cryptocurrency and raising capital through the sale of tokens or coins (ICO or Initial Coin Offerings).

Blockchain ecosystem in India is evolving at a rapid pace and a proactive legal approach is required by blockchain lawyers in India to understand the complex nature of applicable laws and regulations.

How to use an effective Innovation strategy in a business model

Business and Technology Updates

What is an innovative strategy?

The moment a seemingly great business idea strikes one’s mind is also the moment when one needs to realize that ideas alone cannot suffice for the business he dreams of. A great business idea is just the beginning. The key lies in brainstorming over the multiple and multi-layered strategies that can truly transform ideas into profitable business models.

The key difference between What is an innovative strategy? and business strategies is that the former involves the 3 Ps – process, prediction, and precision. Innovation strategies cannot be one-dimensional. They must also include a proper analysis of the competitive and technological environment of a business, a SWOT analysis that can help understand the challenges as well as how to tackle them, and the advantage-disadvantage ratio of the situation. A holistic approach works best. Especially when it comes to businesses, nurturing a culture of innovation strategies in the workplace is urgent and necessary.

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Innovation Strategies – Types and Approaches

No idea can transform into profit without a strategy – be it in business or other dealings. With the challenge increasing in the form of the number of start-ups and businesses selling similar products, the only thing that can establish a real profit for someone is their innovation strategies. Unless one has something new to offer to the user, he cannot sell it to him.

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What are the 4 innovation strategies?

There can be, chiefly, four different types of innovation strategies, according to a classification by Dodgson. These are the proactive, active, reactive, and passive types. The approach, the underlying principle, the directed mission, and the outcomes are different for all four different categories.

Proactive

More research-oriented, hence the market leaders in technology. They always have the advantage of stepping first into the market, and they believe in taking risks for development, be it radical or gradual.

Reactive

Follow what is called the wait-and-watch approach, and do not support taking as many risks as the former.

Active–risk

Exposure is medium, even low at times, for they believe in putting existing technologies to use after waiting for them to have been established. They usually follow a gradual flow when it comes to introducing innovation strategies in their business models.

Passive

Any change or innovation comes only after the customer has demanded it, and their implementation is never radical.

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Innovation Strategies for Business Models

There must be some fundamentals, however, to let one think crookedly. Of course, the purpose is not to spoon-feed the strategies themselves, but there are a few do’s and don’ts that can suffice in the path of turning one’s thoughts into business.

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Business models run on problems more than solutions

It is great to have a business idea in mind, but it is always better to know what it is for. The root of a business is the problem it means to cater to. There is no doubting the fact that there can be multiple solutions to the same problem, and experience has shown that a few, if not all, of these solutions, do end up as successful but competing businesses. Profit would outnumber investments only when the problem chosen is untouched, and unsolved. A good business idea therefore must immediately narrow itself down to the problem it must solve. The solutions will follow soon and automatically.

Think like the Customer

Any business has one keystone – the customer. The best business ideas are bound to flop if they aren’t customer oriented, at least after a certain point in time. As important as it is to come up with a genuinely unique and fetching idea, thinking like the customer – what he wants, what he dislikes, what he desires, and what he deserves – is the feather to the cap. The first big leap in establishing a profitable business model is to know the customer from tip to toe. Besides, one must also learn to narrow down their niche market, for not every customer is meant to profit from your business. A great business idea is just the seed; watering and nourishing it to blossom would take, firstly, becoming the person you are catering to.

Personalization is the key

Businesses all around the world may cater to different customers – different in the cultures they follow, in the stories they believe in, and in the lifestyles, they lead. Yet, these businesses fail to treat them as different. Many services and products are the same for different people from different corners of the world, and thus they fail, no matter how great the ideas are. One of the simplest yet most effective innovation strategies for transforming a good idea into a great business model would be to personalize and adapt it to the customer’s culture and needs. The differentiation that a touch of internal assessment would create would be remarkable.

Surprises are seldom bad

A unique business idea that delivers a promising solution is quite a refreshment in itself. However, transforming it into a profitable business model would become monotonous if it isn’t prepped up at intervals with some elements of surprise. All of these elements don’t need to be designed on the fly. These can be planned and integrated into the model in advance, and even tested for their impacts after the central idea has been running for a long.

Playing with Value and Demand

One of the key principles underlying any business is that customers buy offers only when their value exceeds their price. Therefore, there is a constant need to keep upgrading the value of one’s products. The key to innovation lies in this understanding. To increase the commodity value, one needs to subtly play with the curves of demand and value. The same product can be either delivered in lesser quantity or in tweaked ways to help enhance its value. Then again, it has proved beneficial time and again to focus one’s strengths and time more on planting the seeds of a great business rather than on hunting down profits.

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Conclusion

After the web’s boom, many brains throughout the world came up with ways to make huge profits. A “new” sector, the digital economy, emerged as advanced technologies evolved by night. Business models were created to supply existing items to established markets but in complicated ways. This has always been the challenge of turning an idea into a smart business: being so clever with your method that it’s hard to replicate or think parallelly.

Click Here for AI Startup Valuation Guide.

Our team of advanced patent attorneys assists clients with patent searches, drafting patent applications, and patent (intellectual property) agreements, including licensing and non-disclosure agreements.

Advocate Rahul Dev is a Patent Attorney & International Business Lawyer practicing Technology, Intellectual Property & Corporate Laws. He is reachable at rd (at) patentbusinesslawyer (dot) com & @rdpatentlawyer on Twitter.

Quoted in and contributed to 50+ national & international publications (Bloomberg, FirstPost, SwissInfo, Outlook Money, Yahoo News, Times of India, Economic Times, Business Standard, Quartz, Global Legal Post, International Bar Association, LawAsia, BioSpectrum Asia, Digital News Asia, e27, Leaders Speak, Entrepreneur India, VCCircle, AutoTech).

Regularly invited to speak at international & national platforms (conferences, TV channels, seminars, corporate trainings, government workshops) on technology, patents, business strategy, legal developments, leadership & management.

Working closely with patent attorneys along with international law firms with significant experience with lawyers in Asia Pacific providing services to clients in US and Europe. Flagship services include international patent and trademark filings, patent services in India and global patent consulting services.

Global Blockchain Lawyers (www.GlobalBlockchainLawyers.com) is a digital platform to discuss legal issues, latest technology and legal developments, and applicable laws in the dynamic field of Digital Currency, Blockchain, Bitcoin, Cryptocurrency and raising capital through the sale of tokens or coins (ICO or Initial Coin Offerings).

Blockchain ecosystem in India is evolving at a rapid pace and a proactive legal approach is required by blockchain lawyers in India to understand the complex nature of applicable laws and regulations.

Design thinking for Business Innovation

Business and Technology Updates

Design thinking and business innovation

The usual terms and expressions we associate with design are uniqueness, wow factor, and successful solutions. Surprisingly, all three fit in very well to establish and run a business. There is no doubt then design thinking is a highly crucial aspect of business innovation.

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Why go for design thinking for business innovation?

It is evident from examples taken from all around the world that businesses powered by design perform much better than the rest. When the principles and guidelines of design thinking are applied to a business strategy, productivity, as well as the success rate of the innovation or technology, shows an impressive surge. The reasons are many and well-structured. Firstly, a design-led business has the potential for constant redesigning and ready redevelopment. In short, such businesses shall not fail easily because they always have alternative design options to resort to, and therefore that many times success rates.

Secondly, design thinking for business innovation guarantees two very important parameters for a successful business – constant innovation and improved efficiency. The design process, be it in any field, always aims at creating a goal to attain a preferable solution and involves devising a course of action to attain the same. A successful business strategy is no different.

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What is Design Thinking?

Design thinking is not, however, synonymous with design, for it focuses more on the process and the framework rather than the solution itself. Context is what is of utmost importance to design thinking, and it involves five chief components – framing, ideating, refinement, delivering, and innovation. The structure provided by design thinking is of paramount importance, and it acts like a thinking cycle. The individual or the team adapts itself to the needs of building a context, framing opportunities, experimenting and exploring ideas, and evaluating the pros and cons, the constraints, and the workability.

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Steps of Design Thinking for Business Innovation

Design thinking is not one-sided, nor is it linear. Design thinking can be called an iterative approach, especially when discussing business innovation because it requires constant checks and amendments. In such a situation, it becomes necessary to highlight certain steps that must be followed for the process. Broadly, the steps can be categorized into three major divisions – motivation, ideation, and execution. However, a further detailed categorization proves more useful.

Discovering a problem

The first step towards any business innovation is, without a doubt, discovering a problem, a potential target that the business shall cater to, or the section of end-users it will serve. Without this crucial step of discovery and realization, any business innovation would be aimless, and design thinking would do no good at all.

Understanding the situation

Now that one has a somewhat thorough understanding of what, who, and why they wish to cater their business towards, design thinking takes the lead role. The first step in the design thinking approach begins with understanding the situation. As mentioned before, design thinking is not the same as conventional commercial thinking in that the course of action is more important than the problem itself. This requires a clear understanding of the situation at hand, for only then can any innovation creep out.

Observation and analysis

Once the basic study is done, one must start looking out for more. Be it patterns or statistics, insights or data, the one innovating for a business must keep himself well-informed about the market and the customer. Design thinking involves a proper study before getting down into the process hands-on.

Framing opportunities

Framing one’s POV is a very important step in design thinking. This, however, needs the accompaniment of two equally important aspects – assumptions, questions, and scope definitions.

Incubating

The process doesn’t stop at framing only; reframing, incubating, and meditating on one’s thoughts and analysis, all these are crucial parts of design thinking. After all, the greater the number of permutations-combinations realized and mentally worked upon, the lesser the burden of responsibility on the business enthusiast.

Ideating

The work must then proceed forward from study and analysis to ideating and problem-solving. The design thinking process for business innovation takes an interesting turn when one begins to dwell on their ideas with constant experimentation and explorations. Teamwork comes into an intriguing play here, for the corrections and alterations to a single idea by multiple minds can truly render it successful and worthier.

Prototyping

One very important aspect of design thinking for a business is prototyping. When the time is right, that is after one has spent enough time putting on the thinking cap, evaluating and re-evaluating their ideas, and analyzing options, it is highly recommended that they shape their ideas into reality. This can be effectively done with the creation of a prototype, which gives one dual opportunity – being able to test how a particular idea will work out in real life, as well as not risk one’s business too much, for it is just a sample to test on. The prime motive would be the validation of the innovation before launching it into the mainstream.

Final testing and launch

A successful prototype can be translated into a successful business innovation in no time at all. This is the time for final approval and launch, and one can expect to determine the true value of one’s innovation in terms of feedback by end-users, popularity among the masses, and acceptance of the innovation.

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The difference it creates

When someone is fascinated with business innovation, they usually spend hours alone thinking about it. The solution and action are more crucial to a design-oriented attitude. Hence, business innovation occurs when an individual creates a creative solution for a common problem instead of a common answer for an uncommon problem.

The innovation must be human-centered. This indicates that the solution should be created around customers’ emotions, wants, and reactions without compromising technically or economics. Design-based thinking for business is the only way to do this. Analytical design methods like SWOT or SCBA (Strengths, Weaknesses, Opportunities, Threats) are effective (Social Cost Benefit Analysis).

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Economy Aspect of Metaverse Gaming

Business and Technology Updates

Introduction

Metaverse has changed the way we look at digital games with its immersive visual and virtual experience and use of emerging technologies. We saw the first wave of development metaverse when games like Minecraft and Roblox came. Today, tech giants like Microsoft, Meat, and Apple, although were involved in the gaming way before the metaverse came to light, have now spread their wings to metaverse gaming. Microsoft’s intent to acquire Activision shows its early step toward the metaverse arena. Similarly, Facebook has placed several patents which intend to cover all aspects of the metaverse, including facial expression tracking, wearable magnetic sensor system, avatar personalization engine, and like.

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What is metaverse technology?

The phrase “metaverse” refers to a virtual world that brings together users from all around the world. The distinction that it makes from the technology that is now available is that it allows projects in the metaverse to harness new technologies like 3D reconstruction, augmented reality, virtual reality, the internet of things (IoT), artificial intelligence, and blockchain. In other words, it is a world that exists in parallel with the real one and is in the process of implementing nearly everything that a human is capable of doing in the real world.

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Metaverse Gaming and its Economic Aspect

As was just mentioned, the game industry has put a significant amount of effort into researching and experimenting with various technologies and ideas associated with the metaverse. Blockchain, non-fungible tokens (NFTs), and other similar technologies are among those that have the potential to completely transform the gaming industry. Recent efforts by game designers have focused less on the “fun” aspect of video games and more on the economics of the industry. Making it possible for players to obtain real-world benefits from participating in these games can be the key to retaining their attention and keeping them hooked. The following is a list of characteristics of metaverse gaming that contribute to the phenomenon’s economic value:

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Ownership of assets in the Metaverse

Blockchain has helped developers create decentralized metaverse projects, introducing us to features such as proof of ownership and transfer of value. These features reflect in games as players can now permanently own a character, upskill it, increase its value, and trade it. Similarly, US patent US10786741B2 is a blockchain-based game where game assets are sold in the gaming platform from one user to another, resulting in the transfer of ownership over such items and beneficiary rights accordingly. The game assets are tokenized and are managed and governed via smart contracts.

This is an example of proof of ownership, which, when combined with tokenization, can give each character a value that is completely unique from any other. In addition to this, players are not required to leave the game in order to access the metaverse. It continues to exist even after the session is terminated. The gamers get an experience that is almost identical to what they would have in real life thanks to these features. This near replica is further enhanced by augmented reality and virtual reality technology, which together produce an immersive three-dimensional experience.

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Play-to-earn metaverse

One prominent feature for players who are motivated to engage in metaverse games is the opportunity to earn while playing. The play-to-earn metaverse trend includes rewards like in-game assets and tokens that provide scope to make money. These rewards can be monetized and exchanged or converted into the desired currency. For instance, prior art disclosure, US20190299105A1, includes a method for converting in-game digital assets like avatars, game currency, and tools earned to cryptocurrency. The prior art also allows players to acquire digital assets through fiat currency or cryptocurrency.

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How can one earn money by using Metaverse?

Interestingly, earning rewards is not just restricted to asset exchanges; players can also earn by completing tasks or quests, winning over rival players, and improving in-game characters. On the other hand, the platform might not be able to provide instant money because the majority of in-game tokens, also known as NFT, are converted to crypto or fiat currency depending on their value. Staking is another method that users have at their disposal for utilizing the play-to-earn metaverse function. Players have the opportunity to earn by staking their assets or NFTs on any available platform and generating interest on those stakes.

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Understanding Laws in the Sphere of Technology

Business and Technology Updates

Whenever clients face an issue of applying conventionally framed laws to the evolving landscape of new technologies, dissecting the issue to the basic fragments can be helpful.

Here are few examples:

1. Facial Recognition – using this technology in an organization can provide effective. However, this technology learns from the data set, i.e. using a database of images. So, if that database contains majority of images of male employees, or a particular ethnicity, the technology tool will not be able to recognize women and minorities effectively. Therefore, although unintentional, this will create a bias and the onus will directly fall on the management to ensure such scenarios are avoided.

2. Remote Working – this is bound to increase multifold in near future and companies cannot shy away from their legal obligations. Meeting room discussions are now happening online, and just like that companies have security guards at office premise, a reception to document visitors and record their identification via documents and biometrics, the same practices are required to be enforced digitally. So just like any incident in physical office that would make the workplace unsafe for employees, any situation occurring online during online meetings (including webinars) would be the sole responsibility of the management.