When Does Protecting Your Innovation Become the Thing That Kills Your Startup?
As someone who's spent decades helping companies navigate IP strategy, I see promising founders make this costly mistake regularly.
The IP Strategy Spectrum
For over two decades, I have run an intellectual property strategy and patent analytics firm, helping everyone from Fortune 500 companies to scrappy startups navigate the complex world of IP rights. Whether we're drilling deep into patent landscapes for new R&D initiatives, supporting M&A due diligence, or helping founders decide between patents and trade secrets, our focus has always been on understanding competitive advantage to protect innovation and accelerate commercialization.
Since 2017, my work has shifted increasingly toward startups—through IP Checkups, running the UC Berkeley Deep Tech Innovation Lab (DTIL), and most recently as an investor at Future Frontier Capital. This experience has revealed a fascinating and often dangerous spectrum of IP awareness among founders. Understanding where you fall on this spectrum could mean the difference between building a successful company and creating an expensive paper fortress that nobody wants to buy.
The IP Naive: Most Founders Start Here
Early-stage deep tech founders are generally IP naive and there's nothing wrong with that. They've spent years as engineers or scientists, or have a combination of business and technical backgrounds, but few have deep knowledge of implementing sophisticated IP strategies that align with business and technology goals.
This knowledge gap isn't their fault. Academia operates in silos, and business-minded IP lawyers are typically found in senior roles at large corporations or as senior partners at IP law firms—there's such a premium on their skills that most founders never get exposure to this thinking early in their careers.
I've personally mentored hundreds of students from Haas Business School, Berkeley Engineering, and Berkeley Law, as well as engineers, scientists, and startup founders from across the globe. Most IP-naive founders are genuinely curious to integrate IP learnings into their business models once they understand the fundamentals.
The problem isn't starting IP naive—it's what happens next. Some founders learn just enough to be dangerous, and they swing too far in the opposite direction.
The IP Obsessed: A Dangerous Red Flag
These are the founders—typically technical founders—who spend an inordinate amount of time thinking about, securing, and generally focusing on establishing a strong patent portfolio. Since my pivot to venture capital several years ago, I now recognize that founders who are overly focused on IP issues (specifically filing and obtaining patents) in the early stages of startup building (pre-seed to seed stage) represent a big red flag.
These founders end up focusing on building a strong moat via patents instead of finding customers, generating revenue, and focusing on what really matters: solving an actual problem in a way that is better, faster, and cheaper, overcoming technical risks, and finding product-market fit.
The Seductive Patent Trap
I understand the allure. Patents feel like security blankets for entrepreneurs. The thinking goes like this: "If I file patents to protect my novel innovations, then when large companies inevitably copy my ideas, I can hire a lawyer and sue them to stop the theft. Or better yet, I can skip the messy business of finding customers and simply license my technology to a large company who will handle distribution and manufacturing."
Patent lawsuits are expensive, take years to complete, and often get dismissed for technical reasons. As my father says, "There's only one way to win a patent infringement case and a million ways to lose." Either way, it's antithetical to the deep tech startup mission of making an impact to spend precious time and resources asserting patents against large infringers.
Moreover, big companies are reluctant to sign license agreements with deep tech startups. Why? Because the hard work isn't in the invention—it's in customer acquisition, sales and marketing, distribution, and scaling manufacturing. Large companies know this, which is why they'd rather build their own solutions than pay licensing fees to unproven startups.
The Paper Fortress Problem
The IP-obsessed founder looks back after several years to discover they've built an incredible paper repository with claims protecting dozens of embodiments of an invention—yet they have few customers and little revenue.
Yes, these companies are theoretically "positioned" to stop large companies from copying their innovations, but good luck actually doing it. Not only do you need significant capital to hire patent litigators, but litigation usually takes years and often results in settlements that are inferior to simply building and selling a product.
The goal is to create value, not paper. The goal is to generate revenue for investors, not the right to stop others.
Here's a counterintuitive truth: if you get sued for patent infringement by a large company, you should consider yourself lucky. It means you've created something of value that others want and are generating sufficient revenue to cover the costs of hiring outside counsel—or creating enough competitive pressure that you have significant negotiating leverage.
The Sweet Spot: Strategic IP Thinking
The most successful founders understand that IP strategy is important but not paramount in the early stages. They recognize that patents serve two critical functions early on: competitive intelligence and strategic protection.
Patents as Competitive Intelligence
Smart founders first use patents as a reconnaissance tool. They ask: Who else is working in my area? What are they working on? Where are they establishing rights? How much money are they spending relative to others on their innovation programs? How quickly is the area growing? How crowded is it becoming?
This intelligence helps founders understand the competitive landscape, identify potential partners or acquirers, spot emerging trends, and find white space opportunities that others have missed.
The Trade Secret Advantage
Equally important is understanding what not to patent. The most strategic founders carefully evaluate what can be protected through trade secrets—innovations that are difficult to detect, essential for market success, and most critically, require the founder and core team's involvement to monetize and build.
Trade secrets offer several advantages in the early stages: they don't require disclosure, they don't expire, they're cheaper to maintain, and they can't be designed around. For deep tech startups, the secret sauce often lies in the know-how, processes, and tacit knowledge that can't be easily reverse-engineered.
The Balanced Approach
A balanced, T-shaped founder—one who combines deep technical expertise with broad business and legal awareness —files strategic patents to protect core innovations while focusing their primary energy on:
Validating market demand — Is there actually a problem worth solving?
Building and iterating on products — Can you solve it better than existing solutions?
Acquiring customers — Will people actually pay for your solution?
Generating revenue — Can you build a sustainable business model?
Proving product-market fit — Can you scale this solution profitably?
These founders treat IP as a business tool, not a business strategy. They understand that patents are most valuable when they protect a thriving business, not when they substitute for one.
The Tactical Approach
Strategic IP thinking means understanding when to file patents and when to focus elsewhere. In the pre-seed to seed stages, your primary focus should be on proving that your innovation solves a real problem for real customers who will pay real money.
But when you do file patents, be smart about it. File comprehensive provisional applications with multiple embodiments that will hold up over time as the field evolves. The key is avoiding disclosure mistakes early on—once you publish, you can't take it back.
Here's a tactical approach that maximizes your options:
Use patents as a marketing tool to raise capital. Investors like to see that you're thinking strategically about protecting your innovations.
Leverage the full length of the provisional and non-provisional system — 12 months plus the additional 6 months prior to publication. This gives you up to 18 months to operate in a trade secret stage while keeping the option open to abandon prior to publication if the market direction changes.
Deploy defensive publications for technologies you won't pursue for revenue generation but don't want others to block you from using if you change your mind later.
Be thoughtful about your IP budget in the early stages. Patent costs can quickly spiral out of control, and you don't need to file everything immediately. Here's what many founders don't realize: when you take a PCT patent application to national phase entry at month 30, you're looking at fees for entering different jurisdictions, translation costs for multiple languages, examination fees, issuance fees, and ongoing maintenance fees. This is where law firms make their real money, and costs can easily reach hundreds of thousands of dollars per patent across multiple countries over a few years.
Most importantly, remember that patents are only part of your overall IP strategy. The most successful companies combine strategic patent filings with trade secrets, trademarks and brand protection, strong execution, and deep customer relationships to build sustainable competitive advantages.
The Bottom Line for Founders and Investors
If you're a founder reading this, ask yourself: Are you spending more time on patent applications than customer interviews? Are you more excited about your IP portfolio than your revenue pipeline? If so, you might be falling into the IP obsession trap.
If you're an investor, IP obsession in early-stage companies should raise immediate red flags. Companies that lead with their patent portfolios rather than their customer traction are often signaling that they haven't found real market validation for their innovations.
The companies that win are those that create value first, then protect it strategically. Not the other way around.
It's important to have a strong, well-thought-out IP strategy—but if you go overboard in the early stages, don't expect investors like me to write a check. Your patents won't save you if you never build a business worth protecting.
The most successful deep tech companies understand this fundamental truth: the best moat isn't a wall of patents—it's a wall of happy customers who can't imagine using anything else.
Whatever you decide to do, I recommend that you ignore the confusion!
This post was written with support from Calude.ai. Images developed on Mid Journey.