[Startup Funding] How Do New Patent Laws Affect Your Ability to Raise Money?

[Link: AIA Impact on Start Up Capital – Sterne, Kessler, Goldstein & Fox P.L.L.C.]

Does the American Invents Act help or hinder startups and emerging growth companies in their efforts to raise capital? Yes and yes, explains Robert Sterne of law firm Sterne, Kessler, Goldstein & Fox in the above video. Here’s how:

AIA can help:

  • Reduced fees for smaller entities
  • Continuing of fast-track process gives startups instant patent portfolios to show investors
  • New judges, examiners, and satellite offices should reduce backlog and speed up patent prosecution

AIA can hinder:

  • The move from first-to-invent to first-to-file gives advantage to big companies with deep pockets
  • Not enough being done about the significant backlog in patent applications that still exists (approvals can take 5 – 7 years)
  • New law continues to generate uncertainty and hostility with respect to the country’s patent system

Sterne’s recommendation? Know how the country’s new patent law will affect your company’s ability to generate revenues, and work that into your capital raising pitch:

“Companies that are starting to raise capital need to understand their business model, they need to understand how their business model deals with this new patent landscape, and take a proactive approach in dealing with their investors, joint venturers, and other partners as they build their business. They should not make intellectual property a small part of their pitch – they should make it a central part of their pitch. And by understanding this new landscape better, they can make a more compelling story, raise more money, and get less dilution in the process.”

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