Forbes: Here’s Miracle-Gro for Startups

By: David M. Pridham

Just as gardens need fertilizer, startups need nutrients to help them grow. A great product and a little market buzz may be enough to get a business off the ground. But sooner or later, most startups need a potent and sustainable fuel to really power their growth.

That’s where patents come in. They’re Miracle-Gro for startups, an entrepreneur’s best friend. This is as true in China, a country that has been accused of stealing intellectual property, as it is in the U.S.

Take Chinese startup Xiaomi (pronounced shauw-me), one of the most successful companies to emerge from that country’s entrepreneurial boom. Seven years ago, Xiaomi didn’t even exist. Today it’s is the 5th largest smartphone maker on the planet, selling more phones in China (70 million) than Apple. Until recently, Xiaomi was the most valuable startup in the world, but that honor currently goes to Uber.

It’s true that patent rights in China are more limited than they are in the U.S., and domestic enterprises may be able to get by without patent protections. But when a startup like Xiaomi grows to the point that it wants to expand globally, it needs to secure the patent rights to its own products as well as to the components used in its products. Without these intellectual property (IP) rights, Xiaomi could find its plans to sell phones in other countries stymied by patent infringement lawsuits, and even find its products barred from certain markets.

In fact, that’s exactly what happened when Xiaomi first began selling its smartphones in India. In 2014, the Delhi High Court ruled that Xiaomi had infringed patents owned by the Swedish telecommunications giant Ericsson, and ordered the company to stop making, assembling, importing, or offering for sale its handsets throughout India.

That’s when Xiaomi truly understood how crucial patent rights were to its growth. The company faced a problem, though — growing a high-quality patent portfolio takes time. Indeed, Xiaomi’s vice president of patent strategy Paul Lin estimated it would take up to 10 years for the company to internally develop an IP portfolio of sufficient strength and size to power international growth.

Put simply, the problem for many startups, regardless of where they call home, is that the time to IP is now often much longer than the time to an IPO.

What to do?

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