Nine Figures From a Handful of Patents: What One Startup Taught Me About Patents for Startups

By Babak Akhlaghi on October 7, 2026.  A startup once came to a firm I was working with early in my career with almost nothing. No revenue engine. No leverage. No budget for legal bills. It’s a situation I see often when working with patents for startups — founders who are resource-constrained but sitting on real innovation.

They had a few strategic patents and patent applications. That was the whole portfolio.

They took those patents to big companies and asked for licensing deals. The big companies said no. Then they went further and challenged the patents through reexamination at the patent office, aiming to invalidate them completely.

That startup ended up with nine figures in licensing fees. The path from “no thank you” to that outcome taught me the most important lesson of my career in intellectual property.

The Moment Everything Looked Lost

Reexamination is a serious threat. When a large company files one, they are telling the patent office your invention deserves no protection. They bring resources, expert counsel, and prior art searches that most startups cannot match.

The client faced exactly that. Multiple large players decided the cheapest way to deal with these patents was to kill them.

Here is the part people commonly overlook. A reexamination is also an opportunity.

A patent that survives reexamination carries more weight than a patent that was never tested. The patent office has looked at it twice, under adversarial pressure, and confirmed it. Every future negotiation starts from that strengthened position.

I was part of the team that defended the patents through the reexamination process. The applications had been drafted with this exact scenario in mind. The claims were precise. The specifications supported them. The strategic thinking done years earlier held up under fire.

The Turning Point: Around the Notice of Allowance

Around the time the notice of allowance came through on the reexamination — whether just before or just after — the dynamic reversed almost overnight.

The first significant licensing deal arrived. Then the next company came to the table. Then another.

Once you close one significant licensing deal, the rest follow.

The logic is simple. The first licensee validates the portfolio. Every other company in the space now knows two things. The patents survived a direct attack. A serious player already pays for them. Continuing to infringe becomes the expensive option.

The company that once struggled to pay the firm’s invoices came back with a question I have never forgotten. They asked, “Is there anything more we can pay?”

That is a nice problem to have.

The Lesson: Quality Beats Quantity, Every Time

This case crystallized something I had believed for years and could now prove.

A few strategically developed patent applications are worth more than thousands of applications drafted without strategy. This is the foundation of any effective patent strategy for startups — not volume, but precision.

Volume filing has problems. I see companies measure their intellectual property programs by application count. They report the number to the board. They celebrate filing milestones. Meanwhile, the portfolio contains hundreds of patents that will never survive scrutiny, never map to the company’s product or a competitor’s product, and never generate a dollar.

A strategic patent looks different from the start:

• It targets where the market is going, so the claims read on products the company or competitors will build years later.
• It is drafted to survive attack, with claims supported deeply enough to withstand reexamination and litigation.
• It protects a core innovation, the kind a competitor must use to compete at all.

The startup in this story had exactly that. The strategic value existed from day one. It sat there, invisible to the big companies. It needed pressure to become undeniable.

Pressure Reveals Value

Here is the deeper truth in this case. The value was always there. It just needed to be proven under pressure.

You will hear rejection when you first assert quality patents against large companies. Rejection is the standard opening move. Big companies say no to almost everyone, because most portfolios collapse when tested. Saying no costs them nothing when the patents are weak.

Strong patents change that calculation. When your claims survive reexamination, the other side has spent money proving your case for you.

This means the drafting stage decides everything. The attorney writing the application years before any dispute determines whether your patent becomes a nine-figure asset or a wall decoration. Every claim term, every embodiment in the specification, every strategic choice about scope matters when the reexamination request lands.

You cannot fix a poorly drafted patent under pressure. You can only defend one that was built well.

What This Means for Your Portfolio

If you lead a startup or manage intellectual property at any company, this case gives you a clear playbook. Getting patents for startups right isn’t about filing more — it’s about filing smarter.

Audit for strategy, and count later. Look at each application and ask what product, market, or competitor it actually reaches. An honest answer will surprise you.

Invest in drafting quality. The difference between an adequate application and a strategic one shows up years later, at the exact moment when the stakes are highest. Pay for the thinking up front.

Treat challenges as validation opportunities. A reexamination against a well-built patent strengthens your position. Prepare your portfolio so that an attack becomes the best thing that ever happens to it.

Focus on the first deal. Your energy belongs on closing one significant license. That single agreement resets how the entire market prices your portfolio. The second and third deals move faster than you expect.

The Standard I Apply to Applications

Since that case, one question shapes how I evaluate an application. I ask whether this patent could realistically survive a reexamination filed by a large company in the industry.

If the answer is yes, the application is usually worth filing.

If the answer is no, additional filings rarely fix the underlying weakness. A thousand fragile patents give you a thousand fragile positions.

The startup that could barely pay its legal bills illustrated this well. A handful of well-built patents, defended under real pressure, produced nine figures. The strategy existed before the money did.

Build your portfolio with the same mindset. Consider drafting fewer applications, and draft them to hold up under attack. Let the pressure test what you built. Founders who want to see how this thinking applies to their own filings can read more about how a startup patent attorney works with technology founders.

Frequently Asked Questions About Patents for Startups

What should a startup ask before filing a patent?

I start with three questions, in this order. First, does the feature give the company a commercial advantage, meaning customers, partners, or competitors care about it? Second, can a competitor easily design around it, and if so, can the design-around be protected too? Third, is it patentable? A new technical feature that fails the first two questions is often better served by a trade secret, a defensive publication, or no filing at all. For a deeper look at this thinking, see this guide to building IP that creates leverage.

Is “patent pending” enough to impress investors?

Investors have become more seasoned, and “patent pending” on its own rarely answers their questions. They tend to ask whether you ran a patentability search, whether you completed a freedom to operate investigation, and why you filed in the first place. Founders who can explain the strategic reasoning behind each application stand out from those who simply rushed to file.

Should a startup file a provisional or a non-provisional application?

If the budget allows and the invention is fully cooked, I recommend a non-provisional application. It reaches an examiner sooner, and an issued patent gives you third-party validation to bring back to investors. When the budget is tight, a provisional is a reasonable choice. Include every feature you believe is novel, because a provisional carries no restriction requirement and the filing cost is relatively low.

Where does the patentable invention usually live in an AI startup?

It usually lives in the workflow around the AI model. The innovation often sits in how inputs are processed before reaching the model, how prompts are engineered, or how outputs are processed afterward. Saying “we use AI” rarely carries weight with the patent office or with investors. I ask founders to map the entire workflow and identify the element a competitor must implement to build a competing product. That element is typically where protection belongs.

How should a startup’s patent strategy change as it grows?

The strategy should follow the product roadmap. At pre-seed, the focus is protecting the MVP and its foreseeable implementations. At Series A, customer adoption shows which features matter, and new or improved features can be evaluated against the same business questions. At the growth stage, continuation applications and tangential workflows become options. A portfolio drafted years earlier loses value if the final product is no longer captured by it.

How many countries should a startup file in?

I encourage founders to focus on a few key jurisdictions, usually the primary market and the places where competitors operate. Costs add up quickly, and filing the same invention in five or six jurisdictions can run between $50,000 and $100,000. Saving budget for future innovation and for prosecuting existing applications is usually the wiser move.

When should a startup let a patent go?

Patent pruning belongs in any portfolio review. If a product becomes obsolete, the patent protecting it may no longer serve a purpose. Stopping maintenance fees or ending prosecution on those assets frees budget for protection that matters. A good portfolio review asks which patents are worth keeping as well as what else to file.