What if a promising invention lacks the budget for patent protection?

Many companies, founders and innovation-driven organisations face a familiar dilemma: an idea may have strong technical and commercial potential, but the available budget may not be sufficient to protect it properly.

For many early-stage businesses, filing a first patent application is a significant investment. Even a relatively focused first filing can require a budget of around EUR 5,000 or more, depending on the complexity of the technology, the amount of prior art, the number of embodiments, the drawings required and the strategic considerations involved.

For a start-up or young company, that cost can be difficult to prioritise. At the same time, waiting too long can create risks. The company may need to speak with investors, partners, suppliers or potential customers. It may need to test the market. It may need to show that its innovation is not only technically interesting, but also capable of being protected, owned and commercialised.

This creates a gap in the innovation ecosystem.

The gap between analysis and actual protection

Public funding bodies, incubators and innovation support programmes often recognise the importance of intellectual property. In many cases, they are willing to support IP-related activities such as landscape searches, patentability assessments, innovation audits or so-called IP vouchers.

These tools are valuable. They can help companies understand the competitive landscape, identify relevant prior art, assess technical positioning and make better strategic decisions.

However, such support often stops short of the most important practical step: the actual filing of a patent application.

A landscape search or IP analysis may provide useful insight, but it does not create a patent right. It does not secure a priority date. It does not, by itself, give the company an asset that can be presented to investors as a filed patent application.

From an investor’s perspective, the commercial value of an innovation is often stronger when the company has taken concrete steps to protect it. A well-drafted patent application can help demonstrate that the company has identified its technical contribution and is serious about building protectable value around it.

In some cases, parts of the drafting process may be supported, but it is less common to see funding for the full journey from initial strategy to drafting and filing. This is an area where the Swedish and European innovation ecosystems could be improved. If we want more technical ideas to become scalable companies, we should also ask whether early-stage patent filing is being supported in the right way.

Predictability is part of the solution

One of the practical challenges for young companies is uncertainty. Hourly billing can be difficult to plan for, especially for companies with limited cash flow. A founder may accept an initial estimate but still be concerned about the final cost.

This is where IP firms may also need to be more innovative.

The age of AI brings both risks and limitations. Patent work still requires technical understanding, legal judgement, strategic thinking and careful quality control. Confidentiality and professional responsibility remain essential. There are also technical fields where the use of AI tools is more challenging than in others.

At the same time, new tools and workflows may allow IP firms to make certain services more predictable and accessible. Used responsibly, AI-assisted internal processes may help reduce cost, improve efficiency and support clearer fixed-fee offerings for suitable matters.

This may be particularly relevant for defined patent drafting projects or certain office action responses. Not every case will be suitable for a fixed-fee model, and not every invention can be handled within a narrow scope. But for appropriate cases, predictable pricing can make a meaningful difference.

A clearly defined first-filing package could, for example, include:

Drafting and filing of a Swedish patent application, including up to 10 claims, up to 5 drawing sheets, one inventor review round and filing with PRV.

The exact scope would naturally depend on the case. The important point is that clear boundaries help both sides. The client understands what is included. The IP firm can manage the work responsibly. Expectations become easier to align.

The purpose is not to reduce quality. The purpose is to improve predictability.

Another aspect is the possibility of taking a bolder approach. The discussion above focuses mainly on the filing of a single patent application. In some situations, however, it may be advisable to file several patent applications at an early stage, particularly where a company has identified a strategic white space in the market or technology landscape. This is also something that IP advisers should consider carefully, always linking the recommendation to the client’s budget, commercial objectives and product roadmap. “Think big” is a mindset that European innovators and advisers could perhaps embrace more often provided that it is supported by a clear business rationale.

Can IP firms share the commercial risk?

When working with founders and young companies, IP firms sometimes encounter clients with promising inventions but limited funds. The traditional options are relatively limited: reduce the initial fee, offer a narrower scope, defer part of the cost, or in some cases consider some form of loan-like arrangement.

But IP firms are not banks. Nor are patent attorneys venture capital investors.

One question that sometimes arises is whether an IP firm could take shares in a client company instead of charging normal fees. At first glance, this may seem attractive. The client preserves cash, and the adviser shares in the potential upside.

However, this approach raises important professional and legal questions.

The professional rules for European Patent Attorneys contain restrictions concerning financial interests in industrial property rights. Article 42 of the epi Code of Conduct states, among other things:

“A Member must not acquire a financial interest in any industrial property right in such circumstances as to give rise to a conflict between professional duty and interest. The Member must not charge a fee directly related to the outcome of the services provided by the Member.” This raises a practical question: if an IP adviser takes shares in a client company, could that create an indirect financial interest in the client’s intellectual property?

In many businesses, patent applications and other IP rights form part of the company’s value. If the adviser has knowledge of unpublished inventions or patent filings, the situation may become even more sensitive. Depending on the circumstances, particularly where listed companies or transaction-sensitive information are involved, questions relating to inside information and market abuse rules may also need to be considered.

The point is not that every such situation is automatically prohibited. The point is that the risks are real and should be treated carefully.

From a professional ethics perspective, even the appearance of a conflict can be problematic. A patent attorney must be able to advise objectively. The client must be confident that the advice is based on the client’s best interest, not on the adviser’s own financial upside.

This makes equity-based compensation a complicated route for IP firms that want to support underfunded innovators. In many cases, more transparent and limited alternatives – such as reduced-scope work, staged filings, deferred payment structures or carefully defined fixed-fee packages may be more appropriate.

Patent filing is not always the only route

It is also important to remember that patent filing is not always the only possible strategy.

Depending on the technology and business model, other forms of protection may be relevant. These can include trade secrets, copyright, design protection, trademarks, confidentiality agreements and carefully managed disclosure strategies. For software companies, especially software to consumer (B to C), for example, copyright and trade secrets may play an important role, although they do not necessarily replace patent protection where patent protection is available and commercially relevant. For B to C software companies, it is often more advisable to protect the code, see what sticks with clients and then potentially file for IP instead of file for IP first.

The right approach depends on the company’s technology, market, financing plan and need to disclose information. Sometimes the right answer is to file a patent application quickly. Sometimes it is better to keep the invention confidential while the strategy is developed. Sometimes the best solution is a combination of different IP tools.

What matters is that the company receives practical advice early enough to make an informed decision.

A shared responsibility for stronger innovation

This article is not intended to present a solution to the funding challenge. Rather, it aims to open a discussion and offer some reflections.

If we want to strengthen Swedish and European innovation, we should ask whether the current support systems are sufficiently aligned with how IP value is actually created. Searches, reports and analyses are useful, but in many cases the decisive step is the filing of a patent application.

Further financing is, of course, another key part of the equation. Much has already been written on this topic, and the proposed idea of a “Europe Inc.” framework could become an important step towards improving access to capital and making it easier for companies to scale across Europe. But financing alone is not enough. A truly effective European company framework would also need to make market access across the EU simpler in practice, including recruitment, employment arrangements and day-to-day administrative requirements.

At the same time, IP firms should also reflect on their own role. Can we offer more predictable pricing? Can we create clearer entry-level services for startups and young companies? Can we use technology responsibly to reduce cost without reducing quality? Can we help founders understand earlier what is worth protecting, what can wait and what should not be disclosed?

In my view, the answer should be yes.

Innovation support should not only help identify promising ideas. It should also help those ideas become protectable, investable and commercially useful assets.

That requires action from several sides: public funding bodies, incubators, investors, founders and IP advisers. Better support for early-stage patent filing would be one important step. More flexible and transparent ways of working within the IP profession would be another.

The challenge is not simply how to make patent work cheaper. The real challenge is how to ensure that promising innovation is not left unprotected merely because the first filing was financially out of reach.

If Sweden and Europe want to build stronger innovation ecosystems, we need to make it easier for good ideas to take the first serious step towards protection.

Christian Hafner
Managing Partner
Head of Patent Department
European Patent Attorney