On the Startup Success podcast, we spotlight founders, investors, and thought leaders who are shaping the future of entrepreneurship. In a recent episode, I had the privilege of hosting Jeff Schox, founder of Schox Patent Group—a boutique patent law firm specializing in startups. Jeff shared eye-opening insights into the world of patents, busting myths and offering practical strategies that every founder should know. If you’re a startup founder or investor wondering how patents can protect your innovations and increase your company’s value, this episode is a must-listen.
Here are some key highlights from my conversation with Jeff.
The Journey Behind Schox Patent Group
Jeff’s entrepreneurial story is a masterclass in calculated risk-taking. Starting out as an engineer with degrees in Mechanical, Electrical, and Computer Science from the University of Michigan, Jeff’s first career path seemed destined for the automotive industry. But after a stint at General Motors, he pivoted to patent law, combining his technical expertise with a passion for innovation. In 2004, he made a bold move: he left a secure partnership track at a 150-year-old law firm to start Schox Patent Group in Silicon Valley. Starting fresh without a single client and no connections in California, Jeff worked tirelessly to build his firm. Today, Schox Patent Group has worked with over 700 clients, including high-profile names like Twilio, Cruise, Duo Security, Facebook, Google, and Dropbox.
Debunking the Myths of Startup Patents
Many founders approach patents with skepticism, influenced by common misconceptions. Jeff outlined three myths that often deter startups from pursuing patents:
Myth #1: “Software Isn’t Patentable”
Software founders often assume that their innovations can’t be patented. Jeff’s response? That’s true—until it isn’t.
While some software merely connects existing components, many innovations solve complex, unsolved problems, making them highly patentable. For example:
- Twilio: Schox Patent Group wrote 75 patent applications for Twilio, a software company that revolutionized communications APIs.
- Duo Security: The firm filed 50-60 patents for Duo, all related to software innovations in cybersecurity.
- Cruise Automation: While its autonomous vehicles may seem like hardware innovations, many of the real, patentable breakthroughs were in software.
Jeff’s first test for whether software can be patented is simple: “Are you solving a hard problem no one else has solved before?”
Quantitatively, software patents make up over 80% of Schox Patent Group’s portfolio, illustrating their pivotal role in tech innovation.
Myth #2: “If I Can’t Enforce It, It’s Worthless”
Many startups shy away from patents, assuming they’ll never have the resources to enforce them. Jeff explained that the true value of a patent often lies in how it impacts acquisition scenarios.
For instance, when General Motors acquired Cruise Automation, GM valued Cruise’s patents at $120 million (as disclosed in SEC filings). Although Cruise itself wasn’t likely to enforce the patents, GM needed the portfolio to defend against potential competitors like Waymo.
Jeff likened startup patents to “a sword too heavy for the startup to wield—but perfect for the giant that acquires them.”
Myth #3: “The Cost of a Patent Is the Legal Fees”
Founders often fixate on the upfront cost of filing a patent, which often range from $10,000 to $40,000. But Jeff stressed that the real cost comes from poorly executed applications.
- Failure at the Patent Office: Patent approval rates hover around 60-70%, and poorly written patents drop to 40-50% approval rates. A failed patent not only wastes your money but also publishes your idea into the public domain for competitors to exploit.
- Opportunity Costs: The real cost of a failed patent could be millions of dollars in lost competitive advantage.
A failed patent not only wastes your money but also publishes your idea into the public domain for competitors to exploit.
For startups, Jeff emphasized the importance of working with an experienced patent strategist who can maximize approval rates and long-term value.
Key Patent Strategies for Startups
To help startups navigate the patent process effectively, Jeff shared two cornerstone strategies:
1. Provisional Patents: Flexibility and Early Priority Dates
One of the most critical aspects of patent law that startups often overlook is the one-year statute of limitations. In the United States, once an invention has been publicly disclosed—whether through a product launch, a presentation at a conference, or even a casual mention online—founders have exactly one year to file a patent application. After this period, the opportunity to secure a patent on that innovation is permanently lost. Jeff explained that the best time to start thinking about patents is during Seed or Series A rounds, before key innovations are exposed to the public.
In the United States, once an invention has been publicly disclosed…founders have exactly one year to file a patent application.
A provisional patent application is a cost-effective way to establish an early priority date without committing to a full application. Provisional patents are:
- Lighter-weight: Typically 15-20 pages, compared to 40-50 pages for a full patent.
- Flexible: Startups can decide within a year whether to proceed with a full application, hold the idea as a trade secret, open source it, or even abandon it.
- Affordable: Provisional patents are cheaper than full applications, making them ideal for cash-strapped startups.
Jeff called this approach “sending a friend to wait in line for you,” giving founders breathing room to develop their innovations further.
2. The Invention Funnel: Prioritizing What to Patent
Startups often generate dozens—or even hundreds—of ideas each year, but not all are worth patenting. Jeff advocates for an “invention funnel” approach:
- Start Broad: Collect all potential ideas.
- Filter: Eliminate ideas that aren’t patentable or don’t align with your business goals.
- Prioritize: Focus on 2-3 high-value patents per year that align with long-term strategy.
By taking a strategic approach, startups can avoid wasting resources on patents that don’t deliver value. Jeff emphasized that his firm plays an active role in guiding clients’ IP strategies, helping startups decide what, when, and where to patent.
Hardware vs. Software Startups: Different Approaches to Patents
One of the most striking insights Jeff shared is the contrasting approach to patents between hardware and software startups. For hardware startups, patents often feel essential right from the start. Hardware is tangible, and its development often involves new materials, sensors, or mechanical designs that are naturally associated with patentable innovations. Founders in this space tend to overestimate their readiness to file patents, eager to protect every iteration of their designs. However, Jeff emphasized the importance of patience for hardware startups, as early versions are often “duct-taped” prototypes that won’t resemble the final product. Filing patents prematurely can result in wasted resources on inventions that won’t make it to market. Instead, hardware startups should focus on refining their designs and filing patents only when their technology is robust and ready for commercialization.
For software startups, the dynamic is nearly the opposite. Many founders assume patents aren’t relevant, viewing software as too abstract to protect. However, as Jeff pointed out, software innovations—especially those solving complex, previously unsolvable problems—can hold immense patentable value. Ironically, software startups often wait too long to file, missing critical opportunities to protect their IP. Unlike hardware, software development cycles are typically faster, and patent-worthy ideas can emerge earlier in the process. Jeff advises software startups to act quickly, filing one or two key patents early to establish a foundation, then scaling their portfolio over time.
Jeff advises software startups to act quickly, filing one or two key patents early to establish a foundation, then scaling their portfolio over time.
Understanding these differences can help founders make more informed decisions about their IP strategy, ensuring they prioritize the right patents at the right time. Whether your startup is building physical products or groundbreaking algorithms, aligning your patent strategy with the unique demands of your industry is crucial for long-term success.
Patents play a crucial role in securing a competitive edge, enhancing company valuation, and paving the way for successful exits. They protect your innovations, making it harder for competitors to replicate your work while also increasing your appeal to investors and acquirers. By strategically building a strong patent portfolio, startups can transform their intellectual property into valuable business assets. To learn more about Schox Patent Group, visit schox.com.