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A Primer for the Sustainable Ag Entrepreneur Thinking about Applying for a Patent

May 31, 2012 |

For many sustainable agriculture entrepreneurs the point at which their ideas become ‘real’ is the one at which they must confront the decision as to whether to patent their technology or process. This decision point frequently comes even before pilot projects are established or target customers identified. Unless you’re fortunate enough to work at a university or research facility that is willing to cover the cost of patenting, it will typically involve spending anywhere between $5,000 and $20,000 in legal fees in addition to using team time, at a stage where time and funds are scarce; so the decision is rarely taken lightly.

Most experts still advise entrepreneurs to go ahead and patent, arguing that it offers protection from theft by potential competitors and can help to create barriers to entry for the business down the road. Nearly all entrepreneurs have heard horror stories about a young company seeing its hard work come to nothing as a large competitor purloins their idea and sells it as their own. It’s one of the reasons that annual patent applications are up more than 50% over a decade ago[1].

The most common justification that I hear for patenting is that “investors want to see it”, and – to an extent – this is true.  The majority of investors will want to see a strategy that’s logical from a business perspective, and – in the case of fields such as herbicide and pesticide alternatives or biomass – this will likely involve a robust patent strategy, one which entails not just provisional patent applications but a game plan as to how these can be defended in the future. Despite the youth of the industry, patent battles have already begun in biomass, where BP / Dupont joint venture Butamax filed a lawsuit last year claiming that cellulose to isobutanol firm Gevo is infringing on its patent for production of isobutanol, a flavoring agent. That said, few investors will want to see their funding wasted on unnecessary applications, and this is where it can be tricky for entrepreneurs to balance their natural desire to protect their work against stretching their startup dollar.

In certain areas of sustainable agriculture, the decision is a no-brainer. If you’re planning to compete against a large multinational in an established market where patenting is the norm, then you have little choice but to build up a library of intellectual property (IP).  For instance, natural pest management company Marrone Bio Innovations has “more than three dozen patents pending[2]”.

Elsewhere, there is a groundswell of concern with the current state of the US patent market, with more filings around trivial features and processes, and litigation ever more frequent. This is especially the case in software, an area that has become vital to sustainable agriculture over recent years as local food system platforms and farm management systems become more prevalent.  Mavericks owner Mark Cuban is one of the most famous software patent critics, arguing that patent litigation is wasteful and that it adds unnecessary risk to businesses as it’s near impossible to know the timing and extent of patent costs[3].

Others have ethical concerns around patenting in agriculture, arguing that it could retard the development of the seeds, fertilizers and farming practices that are needed to raise yields in emerging markets in particular. It’s a criticism that has been leveled at Monsanto in light of the 144 patent infringement cases that it brought against farmers for “alleged infringement of its transgenic seed patents and/or breach of its license to those patents” between 1997 and April 2010[4].

For some, a patent filing being public is a deterrent. At a recent conference, Bruce Moeller – CEO of irrigation control specialist Aquaspy – explained the company’s decision to forgo filing for patents by arguing that “a filing would just give our competitors a blueprint”.

The current zeitgeist in entrepreneurialism is to focus on figuring out a customer base, and then securing orders before all else.  In lean times, picking up sales that could support the business’s growth is paramount. This pushes filing patents further down on the agenda as there’s little utility in a perfectly formed intellectual property portfolio if you have no resources with which to defend it.

Ultimately, the decision is often a practical one for most entrepreneurs. As one ag software entrepreneur explained, “in the time that it takes me to put together a patent application for my product, I could actually build the darn thing”.

Nicola Kerslake is a real assets investor, entrepreneur & advocate and maintains the blog, Real Assets Junkie.

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