Why technology startups shouldn’t file for software patents

In March 2011 Alexander Bibighaus and I celebrated over a couple of beers. We just completed the filing process for our first software patent. It was a glorious achievement for both of us. We became good friends in college and we always spoke of starting a company together. Years later we hooked up to create Zosh a mobile app for filling out documents and signing them from your mobile phone. The technology we developed was born from a complicated solution to a really simple problem:

”how does one fit a really long signature on a very small (smartphone) screen?”

We spent time and money filing our patent. If given the choice of doing against would we? Yes. However when I counsel other startups about whether or not they should file for a software patent I generally advise against it. Filing for a patent is an expensive proposition in terms of time and money:

  • Time spent fleshing out the idea
  • Time spent explaining idea to attorney
  • Time spent adding documents to provisional patent
  • Time spent creating diagrams for provisional patent
  • Time spent reviewing patent application
  • Money spent on attorney
  • Monday spent on filing costs
  • Time spent converting provisional to patent
  • Time spent creating various claims

But the biggest cost of filing for a patent is the opportunity cost. While you are focusing both time and money on creating a patent you aren’t growing your startup.

It actually gets worse. Patents are long term investments. They do nothing for you in the short term because it takes many years to actually get the patent approved. At that point you have to hire lawyers and go sue which takes even more time.

All of this discussion doesn’t even touch on the growing support to get rid of business process and software patents because they stifle innovation.

Startups should be thinking about the fastest path to validate their business and then grow. Patents don’t help with any of that, they are just a distraction.

I’m a hypocrite though because we filed for a patent within the first two years of creating Zosh. Our situation was unique however. I came up with the idea of Zosh right after the introduction of the iPhone. It was a brand new platform and the first time we’ve had a real computer with a touch screen that could fit in your pocket. Zosh was always meant to be a land-grab play. There was this new platform that would likely explode and grow. If we could own mobile e-sign by being the first app to market we could create an opportunity for a fast acquisition. The patent was part of that strategy and reinforced the need to acquire us rather than compete against us.

Alexander is the one who really deserves all the credit for this patent as he is the one who invented the solution. We spent a lot of time together talking through ways to solve the problem and Alexander would go home and code test models. We would try it out and then go back to the drawing board. It took six months of this process before we had the breakthrough solution.

We got lucky in a lot of ways. We sold the company in the third year and the patent made the company more valuable. The patent gave us leverage in our negotiations and allowed us to ask for more cash upfront.

Unless the patent is required for some critical part of your business and you absolutely must have it, you should not waste resources on it. Build a successful company first and worry about the patent later.

For fun here is a snippet from the actual patent description for Zosh. We filed this in 2009! We were way ahead of our time — yeah I’m bragging a little.

The present disclosure relates in general to smart devices, and more particularly to systems and methods for collecting a signature using a smart device. 
As communications and computer technology has advanced, users are increasingly using smart devices (e.g., cell phones, personal digital assistances, mobile computers, etc.) for entertainment and the conduct of business. Advances such as electronic mail, the Internet, and portable document formats have also enabled the efficient electronic transmission of documents between individuals.
The application or addition of a written signature to a document is often desirable as a means to indicate an individual's assent or approval to the contents of the document (e.g., a signature on a contract, letter, form, or other document), and in many cases is required for a document to be legally binding in many legal jurisdictions. However, traditional smart phones often do not allow a user to apply or add a written signature to a document otherwise accessible or viewable by the user via a smart device. In addition, touchscreens available on modern smart devices are often small and do not often provide a large area to allow a user to sign his or her name. Furthermore, because the size of a user's fingertip is typically larger than that of a writing device such as a pen or pencil, the use of a fingertip to make a signature may cause an aesthetically unappealing signature, or a signature that deviates significantly in appearance from a user's traditional “pen-on-paper” signature. While the use of a stylus may overcome such a disadvantage, many smart devices do not include styluses, and many users of smart devices prefer not to transport additional equipment for use of their smart devices. 
In accordance with the teachings of the present disclosure, disadvantages and problems associated with collecting a signature using a smart device may be substantially reduced or eliminated. 
Accordingly to at least one embodiment of the present disclosure, a signature module executing on a smart device may allow a user to input a signature via the smart device display with a pixel size larger than then pixel size of the smart device by causing a viewable portion of a signature file to scroll relative to the display while the user is inputting the signature. In addition, the signature module may display to the user with an interactive pen tool, that functions as a “virtual pen” to allow a user greater control over inputting his or her signature into the smart device. After a signature has been captured, a document viewer module executing on the smart device may allow a user to appropriately position and size the signature for placement in a document being viewed on a smart device.

Check out our patent on www.google.com.

Note: Our product was called Zosh but our company was called ABJK NewCo.

One of the complicated flow charts included in our patent.


Originally published at www.joshkerr.com on July 6, 2014.

Published by joshkerr

Josh is an 8x startup founder and angel investor.

Leave a comment

This site uses Akismet to reduce spam. Learn how your comment data is processed.