SaaS

When Should a Software or SaaS Company BUY a Patent?

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First of all, I am not a patent attorney, but I know when to strategically use them (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 for any software or SaaS company.

You may have heard of Groupon. If you haven’t, then read about it because it is a very interesting business model. But the angle for you is to learn about how (from my perspective) they are using patents to beat new startups trying to compete with them.

Think of it this way; their business model and site is relatively easy to replicate, as essentially they 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 set up new sites in local markets). So Groupon in essence, has a real “execution risk” to their business model … this is where patents come 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 the patent, or discover the invention). They are now using it to fight off copycat sites. Pretty smart!

So remember this: if you have a real “execution risk” to your business model, and even if you don’t have a patent or you are not sure you invented anything new, talk to a patent broker, as maybe you can buy a patent that covers your technology.

It could really help you ward of competitors, especially if your business model and technology are 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, as they can really help you differentiate yourself from the pack.

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

Ron Epstein’s Bio at IPotential.

Legal Disclaimer: This is for informational and educational purposes only, and does not constitute legal advice. Contact your attorney for legal advice, which should be provided after review of the facts and applicable law.

Jeremy Aber, a Software Licensing Attorney, represents software, SaaS and IT services companies on software licensing, copyright, open source, distribution, reseller, OEM and master services agreement projects. This article first appeared in his blog.

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