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- The irrelevance and importance of startup patents
The irrelevance and importance of startup patents
Worthless? Essential instruments? Or tools of deception?
If you’ve ever worked in research, you know the fundamental role patents play in turning a discovery into a product.
You are probably also aware that despite a lot of incentives to file patents as soon as possible (both from the university, company and investors), this is just one of many components that make a product successful.
If you’ve been wondering about the ultimate use of patents, a US study showed that 95% of patents are not worth anything and 50% of granted patents are allowed to expire instead of paying maintenance fees.
Why does this happen?
The 3 reasons patents become worthless
#1 - Lack of market
The invention is not marketable and despite the excitement of filing a patent, there is no reward for having a lot of patents.
Patents are only worth anything if they are directly linked to a product that generates (or will generate) revenue.
Most times such a value-inflection point never comes and patents expire.
#2 - Overdesign without manufacturing
This is not about building a lab prototype or a manually assembled tester. It’s about knowing (or partnering with someone) who can manufacture the product at scale for a reasonable price.
Many scientists consider this to be a trivial step.
After spending years on fundamental problems, how hard can it be to optimize a manufacturing/engineering process?!
It turns out, this is a key reason why most patents mean very little and why 95% of university patents go unlicensed.
#3 - Weak vs strong patents
![](https://media.beehiiv.com/cdn-cgi/image/fit=scale-down,format=auto,onerror=redirect,quality=80/uploads/asset/file/fe1d727e-ed31-4fa0-8f76-e48cddbb3806/Weak_strong_patents.png?t=1718570715)
That’s why competing companies usually don’t take long before finding a different enough technical solution to achieve the same goal.
As you can imagine, it’s very difficult to receive a patent that is both conceptual and technical and this is why almost all patents are purely technical and “weak” in nature, making them useless even if the product reaches the market.
One of the main reasons is that patents are usually left to engineers who are technical experts and do not always realize that patents can also be nuanced and have a broader scope. Generally speaking, patents are granted if the invention is not obvious to a “person of ordinary skill in the art”, making it hard for experts to assess what’s obvious and what’s not.
Overall, this is less common in pharmaceuticals with standard formulation/manufacturing protection practices but very common in medtech and healthtech.
How patents can stop innovation and harm patients
It’s no secret that financial incentives drive behaviours and more often than you think patents many decisions, not always in favour of better products.
Here are a few examples:
Pharma unwillingness to research and improve known chemicals (unpatentable) because without patent protection there is no financial benefit
An existing patent can discourage a medtech manufacturer from improving the product, even if this would mean preventing adverse health effects
A new treatment label has a harmful dosage because it’s protected by a patent, instead of having robust clinical evidence
If you’re curious about these examples, check out this Nature Article on Negative Innovation.
When patents are misused
A few weeks ago, I talked about the story of Theranos and what people working at startups can learn from it.
What I did not mention is that although Theranos never had a working product, it had many patents to its name, which were important tools to give people confidence.
Most of their patents sounded reasonable at first glance but had no uniqueness and were at best ideas to simplify a well-known process.
Here are two extracts from one of their cornerstone patents (US9677993B2), filed in 2015 and approved in 2016.
![](https://media.beehiiv.com/cdn-cgi/image/fit=scale-down,format=auto,onerror=redirect,quality=80/uploads/asset/file/253437ee-ad29-41a4-a1fa-1455d025f185/Theranos_-_patents_1.png?t=1718569160)
Claim 1: the most important in a patent
![](https://media.beehiiv.com/cdn-cgi/image/fit=scale-down,format=auto,onerror=redirect,quality=80/uploads/asset/file/c925688f-ad97-439e-b148-cc4141391f56/Theranos_-_patents_2.png?t=1718569173)
Claims 2 to 7: the pinnacle of irrelevance
This is an example of how patents don’t need to lead to any working product, let alone a product that creates value and makes money.
Here is the full patent if you want to read it yourself (be prepared to be shocked!)
If you’re not an expert in the field, it’s a normal instinct to rely on patents as the definition of a novel approach. Many times it could not be further from the truth.
But don’t be discouraged because investors, government agencies and media fall into the same trap every time.
In the end, patents can change the world just as well as they can play a part in a fairy tale so it’s all about asking the hard questions instead of putting our blind trust into a piece of paper.
A different take on patents
What if a patent cannot be turned into anything yet but has the potential to become useful in the future?
Maybe someone is working on an enabling technology that will make its concept feasible or perhaps manufacturing costs will go down and turn the idea into a viable investment.
The truth is that nobody knows, which brings me to the value of a patent.
Assuming a strong patent with exclusive rights, a patent is an option to pursue a product or continue developing a technology immediately or in the future as conditions change.
I disagree with the assumption that patents are worthless because the unique right to develop a product always has some value.
Beyond pricing financial models (maybe a topic for another article), what’s important is not to consider patents as a one-and-done thing startups do at the beginning of their journey but as ongoing options to pursue certain paths, now or in the future.
This means giving them the importance they deserve: not on a pedestal, nor in the trash.
If you enjoyed this issue, share it with someone who is passionate about innovation!
This week's top scientific reads
Gene therapy restores hearing in five children born with inherited deafness (Nature Medicine)
Promising in-human results for immunotherapy using novel mRNA delivery that heats up cold tumours (Nature Drug Discovery)
Tx-LLM: the most powerful LLM for therapeutics by DeepMind (arXiv)
The gene that helps cancer cells spread throughout the body (Mass General)
Anti-inflammation therapy prevents recurrent complications after ischaemic strokes (The Lancet)
Latest European funding rounds in health & bio
BetaGlue raised €8M for their oncology radiotherapy platform 🇮🇹
Medi2Data raised €2.5M to develop a medical data platform 🇬🇧
Resilience Care raised €23M to advance their remote monitoring medical device in oncology 🇫🇷
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