Startups love patents—and for good reason. A solid patent can protect a breakthrough, attract investors, and offer long-term leverage in competitive markets. But there’s a hidden danger that many founders don’t see coming: the sunk cost trap of low-value patents.
It begins innocently. You file early to lock in IP while still figuring out product-market fit. Then the market shifts, priorities change, and what seemed crucial six months ago now feels irrelevant. Yet the patent fees keep rolling in—and abandoning the application can feel like a loss.
But that emotional bias can quietly drain your startup’s legal budget. Smart founders know when to double down and when to cut loose. Here’s how to make strategic patent decisions at every stage—before they drain your runway.
The Patent Lifecycle: Built-In Checkpoints You Shouldn’t Ignore
Most startups treat the patenting process like a one-way street. But it’s better viewed as a series of checkpoints—each one offering a chance to pause and reassess.
A typical patent’s cost breaks down into three phases:
- Drafting: Filing the initial application.
- Prosecution: Arguing claims and navigating examiner rejections.
- Maintenance: Paying annuities to keep the patent alive (for up to 20 years).
Each of these phases should serve as a decision checkpoint. Before moving forward, ask: Is this invention still aligned with our strategy, product, and market?
Unfortunately, many startups treat these moments as administrative tasks. They keep paying simply because they’ve already invested time and money. That’s how bloated patent portfolios full of low-impact filings are born.
4 Signs It’s Time to Walk Away From a Patent
To avoid wasting resources, you need to spot weak or obsolete patents early. Here are four red flags to watch out for:
1. No Market Validation
If no one’s buying the product the patent protects, it’s probably not worth defending. Even granted patents tied to unvalidated ideas offer minimal ROI. Think of Google Glass—despite its innovation and patent backing, it failed to find a market twice.
2. Industry Has Shifted
If your patent protects technology that’s been leapfrogged—say, local networking hardware in a cloud-first world—it may no longer be relevant. Instead of clinging to it, shift focus to IP that aligns with current industry direction.
3. Prior Art Undermines Novelty
Sometimes, what felt novel at filing turns out to be old news. If prior art reduces the strength or scope of your claims, the patent may not be enforceable—or valuable. Continuing prosecution could just burn legal fees for a patent no one can defend.
4. No Business Use Case
Every patent should serve a business purpose—protecting revenue, blocking a competitor, or enabling licensing. If a patent doesn’t support any current or near-future strategic goal, it’s just a line item on your legal budget.
Build a Patent Pruning System: Don’t Just Wing It
Relying on gut instinct won’t cut it. As your IP portfolio grows, you’ll need a repeatable framework to assess and retire underperforming patents.
Rank by Lifecycle Stage
- Idea Stage: Does this invention support your product roadmap?
- Post-Filing: Has the market shifted? Is it still relevant?
- Pre-Renewal: Does the granted patent support revenue or block competitors?
Include Diverse Stakeholders
Don’t let your legal team make the call in isolation. Include product, engineering, marketing, and finance leaders in the review process. A narrow legal view can miss strategic value—or overestimate it.
Use Patent Management Tools
Platforms like IPfolio or Anaqua can help you centralize decision data, track patent performance, and create collaborative scoring systems to streamline pruning.
Strategic Pruning Frees Up Resources for the Future
Pruning a patent isn’t just about saving on fees—it’s about reinvesting in the innovations that truly matter.
Consider IBM. In 2020, they stopped chasing patent volume for its own sake. “We’re no longer pursuing patent leadership,” the company said. Instead, they doubled down on selective filings and redirected resources toward AI and quantum computing—areas with clear strategic payoff.
The lesson? Your IP strategy should evolve with your business. Prune what’s obsolete so you can protect what’s next.
Takeaway: Protect the Future, Not Just the Past
Don’t let your patent portfolio become a museum of failed ideas. Every dollar spent on a dead-end filing is a dollar that could’ve protected something meaningful.
Is your IP working for your business—or are you just paying to maintain the past?
