The crucial role of trademark and patent registration for startups

With more than 50 years’ experience, Katzarov advise companies and entrepreneurs on all matters related to intellectual property (IP). Thanks to their expertise, they highlight the key insights of the latest “Patents, Trademarks and Startup Finance” study for startups.

Startups have emerged as key drivers of economic growth, innovation, and job creation in Europe. However, they often face challenges in accessing funding and achieving successful exits.

The study of the European Patent Office and EU Intellectual Property Office “Patents, Trademarks and Startup Finance” published in October 2023 sheds light on the significance of intellectual property rights (IPR), specifically trademarks and patents, in facilitating startup growth, financing and investor confidence.

This article explores the insights from the study, using statistical data to underscore the indispensable role of IPR in startup success.

Key findings

• Startups with registered trademarks are 4.3 times more likely to receive seed funding, while those with registered patents have a 6.4 times higher likelihood.
• Startups with both trademarks and patents experience the highest chance of funding at both seed and early stages.
• Filing for both trademarks and patents is also linked to a more than twice as high likelihood of a successful exit for investors, usually through an initial public offering (IPO) or acquisition.
• The biotechnology sector utilises both trademarks and patents the most extensively, with nearly half of all startups in this sector applying for at least one (or both) of these IP rights, followed by manufacturing, healthcare, artificial intelligence and data and analytics sectors.
• Only around a third of startups file for IP protection before receiving seed funding, with trademarks filed more frequently than patents at this stage.
• Among startups receiving seed funding, those with either a trademark or a patent received significantly higher funding amounts than those without any IP protection.
• Filing for European trademarks (EUTMs) and patents is associated with an even greater increase in odds of obtaining seed funding, suggesting investors value international expansion plans.

Why are trademarks and patents important for startups?

Protecting innovation and ideas has become essential for startups in order to stay competitive and accelerate growth.

Patents play a key role in that aspect by granting exclusive rights to inventions and preventing others from copying them. Additionally, trademarks safeguard unique product characteristics and brand names, protecting consumer trust and preventing confusion.

Furthermore, trademarks and patents can be used to signal value to investors. Filling for IP rights demonstrates a company’s commitment to protecting its assets, making it a more attractive investment prospect.

This is also a pathway towards securing hiring returns. Indeed, by limiting competition, trademarks and patents can help startups command higher prices for their products or services and generate additional revenue through licensing agreements.

Finally, these forms of IP can act as collateral for loans and attract venture capitalists looking for innovation companies with long-term growth potential.

To conclude, the “Patents, Trademarks and Startup Finance” study provides compelling evidence of the critical role of trademark and patent registration for startups.

IP rights not only protect and enhance the value of a startup’s intellectual assets but also serve as key instruments for business development and powerful signal for investors, increasing the likelihood of securing funding and achieving successful exits.

Building your startup’s future: leverage your IP with Katzarov

The world of IP can seem complex, but for startups, it holds the key to unlocking long-term success. This is why Katzarov have dedicated a unique desk, “IP for Start-Ups”, specifically to support startups at every stage, regardless of the industry.

For years, they have championed the power of IP assets in driving corporate value. They are a team of expert legal and technical professionals (Patent, Design & Trademark Attorneys) who fluently speak the language of entrepreneurs, innovators, and founders.

Many of their specialists boast dual backgrounds in consulting firms and multinational companies, bringing a wealth of operational and business-oriented expertise to the table. Their team of experts are dedicated to helping startups protect their ideas and unlock the full potential of their IP.

Source: Katzarov