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What Shark Tank Gets Right and Wrong About Patents. Episode 123

The Role of Patents in Entrepreneurship


My guess is that most of my listeners are entrepreneurs, and you probably watch the show Shark Tank. If you’re not familiar with it, an entrepreneur pitches their product to five potential investors, called “sharks,” in hopes of securing a deal in exchange for equity in their company.


Not every entrepreneur’s product can even be subject to a patent. For example, there was a girl who had her own lemonade brand. There’s not going to be a patent on her lemonade. If she’s successful, it will be because her lemonade tastes better, she has better marketing and distribution—not because the lemonade is patented.


So let me repeat this: you don’t need a patent to have a successful product. I probably tell half the people who contact me that they probably shouldn’t get a patent. It could be for a variety of reasons—maybe what they want to patent can’t be patented. Maybe they could get a patent, but it would be so narrow that it would be easy for people to design around it. Or maybe the success of their product isn’t going to come from the patent but because they’re great marketers. And sometimes, I just tell them that the cost to get a patent might be better spent elsewhere in growing the business. If someone happens to copy them, so be it—but at least they’ve saved money and still achieved success by being first to market.


What Shark Tank Gets Wrong About Patents


Now, what does Shark Tank get wrong about patents? I think a lot of the issue comes down to editing. It’s a short show and they don’t have time to go into the weeds on what a patent actually protects.


They’ll often ask the entrepreneur if they have a patent. The entrepreneur says, “Yes, I have a utility patent.” But rarely is there a follow-up question like, “What exactly does your patent cover?” If they have a product with 15 parts, can someone just remove one part and make a knockoff that doesn’t infringe the patent? We don’t know, because they hardly ever say what the patent covers. That’s one of my biggest complaints. Behind the scenes, maybe they go into this—but we don’t get to see it.


I once had a client come to me asking if they could copy a product they saw that had “patented” on the packaging. I told them, “I have no idea—maybe it’s not the product that’s patented at all. Maybe they patented the packaging itself.” You just can’t tell without looking up the actual patent number and reading the claims.


The “Provisional Patent” Misconception


Another pet peeve of mine—and every other patent attorney I know—is when someone says they have a “provisional patent.” There’s no such thing as a provisional patent. There is a provisional patent application, but that application never turns into a patent on its own. It isn’t examined. I could file a provisional application for a pencil and then say “all pencils are patent pending.” But that means nothing. If it were examined, it would get rejected. So if someone says they have a provisional or even a non-provisional patent application on file—it’s just patent pending. It tells me nothing about whether they’ll actually get a patent.


Design Patents Are Often Misunderstood


Another thing I see is someone saying they have a design patent. A design patent only protects how a product looks—not how it functions. So when someone pitches a highly functional product and says they have a design patent, I often think, “So what?” Someone can copy your product and just make it look different. They’re not infringing.


That said, design patents can be useful. One of the most successful Shark Tank products was Scrub Daddy—a sponge shaped like a smiley face. The look is part of the appeal, so a design patent is useful there. But they also got utility patents on the material and process of making it, so they covered their bases with both design and utility patents.


Shark Reactions to Patents


Some sharks are more patent-friendly than others. Mr. Wonderful (Kevin O’Leary) often asks if the product is patented. If not, he might say, “What’s to stop a big company from copying this and crushing you?” That’s a good question. But it’s just that—a question. The answer might be, “They could copy me, but by the time they do, I’ll already have made $10 million.”


Mark Cuban is more known for being anti-patent. He often says it’s not the patent that’s going to make a company successful, but other aspects of the business. But even he has threatened to sue Walmart for infringement of a hoverboard patent in which he had invested. So it’s convenient to like patents when you own one and not like them when you’re the target of a lawsuit.


What Shark Tank Gets Right About Patents


Occasionally, Shark Tank gets it right. I remember an episode with a product called Coolbox, Season 7, Episode 23. It was a toolbox with features like Bluetooth speakers, USB ports, a whiteboard, lights, phone stands, a magnetic lid, a bottle opener, and a clock.


Lori asked if they had a patent. The entrepreneur said, “Yes, we have a provisional patent.” That was the first red flag—there’s no such thing. Then Robert asked what the patent was on. The entrepreneur said it was on the combination of all the features. Robert replied, “So no one can put Bluetooth speakers on a toolbox?” The entrepreneur said it was the combination.


But listing all the features actually weakens the protection. If someone copies the product and removes one of the features—say, the magnetic lid—then they may not be infringing. Lori wisely asked, “What if someone makes it without the magnetic top?” The entrepreneurs responded with vague answers about brand-building and being first to market. Damon thought of it as a licensing deal, but Mark pointed out that a licensee would want complete patent protection. He said his lack of confidence came from the fact that there was “nothing protectable.”


This is a great example of how just combining features that work the same way as they do individually is often considered obvious and therefore unpatentable. I talk about this in my episodes on obviousness. Combining a flashlight, Bluetooth speaker, and toolbox isn’t necessarily innovative if each part works exactly as it did before. Adding 20 parts doesn’t help if someone can just eliminate one part and avoid infringement.


Do Patents Matter on Shark Tank?


In the end, they got a deal, but it wasn’t great. The product is still around, but in a cheaper version than what was shown. I give credit to Shark Tank for including some of this detail in that episode.


One study found that about 77% of device-based products on Shark Tank were patented or patent pending. Of those that got a deal, 81% had a patent or patent application. Of those that didn’t get a deal, only 61% had one. That doesn’t prove causation, but it suggests some value in having a patent or being patent pending.


So while having a patent isn’t required to be a successful entrepreneur, and having a patent doesn’t guarantee success, it can help—especially if you want a licensing deal or investor interest. But know what you’re getting. Patent pending isn’t a patent. You don’t have enforceable rights until the patent is issued.


Final Thoughts


I’m Adam Diament, and until next time, keep on inventing.

 
 

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