GoTo hit $100m in year one. The investment bankers wanted to take it public.

The bankers said, ‘Where’s all your IP?’

We said, ‘We don’t have any IP.’

They go, ‘Well, didn’t you patent this thing?’

I said, ‘No …  I thought it was obvious (and unpatentable).

And they said, ‘Well, you gotta patent it.’

Well, it had been a year and seven days since I had shown it on stage. You can only file for things that have been shown publicly within one year (US).

So I missed the deadline to file for a pay-per-click by seven days.” 

Bill Gross the ‘inventor’ of pay-per-click advertising should have made a gazillion from his business, but as he’ll tell you himself, he screwed it up.

The idea seemed so obvious to him that he didn’t think to patent it.

And by the time he’d realized his mistake, during his first conversations with investment bankers wanting to take GoTo public, pay-per-click and the associated auction pricing model, was unpatentable. 

What happened next?

Google ‘borrowed’ the idea from GoTo adopted a similar model with AdWords, (it was unpatented) and Google made the $billions!

Did Google steal the idea? Not really, says Gross. “We didn’t patent the idea. So if we don’t patent it, they can copy it.” Yet Gross is convinced the concept of a cost-per-click, auction-based search-advertising system would have been patentable, in retrospect. By the time he thought to do it, though, it was too late.

Patentability has changed since the turn of the millennium but even so this illustrates a couple of important points:

– Many inventors do not think their idea is that unique or valuable

– Publication (Ted talk in Bill’s case) before IP protection is a really bad idea

– Patents can help protect competitive advantage

– Investors (smart) are looking for moats and IP protection

Oh by the way Bill Gross is a highly successful serial entrepreneur who made a regrettable patent mistake. Gross did later however make $350m suing Google for patent infringement!