When Should a Software/SAAS Company BUY a Patent?

First of all, I am not a patent attorney, but I know a little about their strategic use (and I stayed at a Holiday Inn last night). A recent news story got my attention, as I think it is a great example of when to buy a patent. This should be useful to any company seeking growth venture capital or growth equity.

You may have heard of Groupon. If you haven’t, then read about it because it is a very interesting business model. The angle for any software or SAAS company is to learn about how (from my perspective) they are using patents to beat their competitors. 

Think of it this way, their business model and site is easy to replicate because they essentially have a great idea of how to bring coupon buying to local markets. The problem is they are widely successful, and so copycats are coming into their market really fast (maybe faster than Groupon can setup local market sites). So Groupon, in essence, has a real ‘execution risk’ to their business model…this is where buying patents comes in! 

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

So remember this: even if you don’t have a patent or you think you invented something new, talk to some patent brokers so you can possibly buy a patent that covers your technology.

It could really help you ward of competitors, especially if your business model and technology is easy to replicate = execution risk. Where do you find a patent broker? Well there are several of them, but the leader in this space in my view is Ron Epstein’s IPotential. 

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

Here is a copy of the petition for you detail oriented folks. 

Ron Epstein’s Bio at IPotential

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