Debate continues as to whether startups should invest resources into patent filings or use those resources for critical items such as product development. This debates changes, however, when differentiating between startups in existing fields — such as social media — and those in emerging fields — such as augmented reality. Based on my own experience, if a young company falls into the latter category, then it might be more critical to pursue intellectual property protection.

Does the current patent system have issues? Yes. Brad Feld, Fred Wilson, and other industry thought leaders have been outspoken on the need for patent reform, especially with respect to software and trolling behavior. But for startups that are innovating in early stage industries, patents are critical to their survival, allowing them the time and freedom to execute their technology and business vision.

As I look back now, our decision at Zugara to file patents in 2009 as an extremely young company was the best decision we ever made. Now a four-year-old augmented reality company, we have been issued our first US patent in September of this year, titled “Providing a simulation of wearing items such as garments and/or accessories.” The patent relates to the method of using gestures to select virtual items to then view the virtual items on yourself in a video feed. This is now commonly called a “Magic Mirror” or “Virtual Dressing Room.”

When we started, the augmented reality industry was still nascent, quickly approaching the peak of inflated expectations in Gartner’s Hype Cycle. The decision to dedicate time and resources to IP protection was certainly not an easy one, but what happened as the market matured proved our decision to be the correct one.

As our prototype gained more visibility, we watched the inevitable knockoffs start to flood into the market. First, agencies attempted to replicate part of our technology. Then technology companies took a stab at it, recreating elements of our interface. We even had a company in Australia use the exact marketing copy from our site alongside an attempt to replicate our tech.

Had we skipped the process of protecting our IP, our innovative technology would have turned into ‘creative license’ for others to copy. But because we have a vision for our platform and believe that our technology itself will prevail, we have been able to maintain our focus on gaining traction with our customers – all the while knowing that we have the secret weapon of IP protection up our sleeves, should we ever need it.

Four years in, what was previously an emerging field is becoming more mature. Consumers are using gestures and motions like they would a mouse. Voice control and recognition is replacing mouse and text input and 3D or depth-sensing cameras, like Microsoft’s Kinect, Samsung’s iTV, and those from Softkinetic and Leap Technology, are quickly coming onto the market. Closer to home for us at Zugara, we are beginning to see more and more virtual dressing dooms deployed by major brands and tech companies online and in retail.

The virtual Gold Rush into the software and hardware of gesture-based interactions has started. Having a patent is the only thing protecting us as early innovators in a market that has larger challengers seeing dollar signs.

Opponents of patents — especially VCs — will argue that patents stifle innovation and even the economy. But outside of the actions of patent trolls, I’m not sure they really stifle much of anything. Competing companies entering a maturing industry without doing sufficient IP due diligence don’t deserve the rewards of innovation. In the same way, the innovating startup needs to ensure that it has a means of fighting superior challengers when they inevitably enter the no-longer virgin space.

For many early stage companies that later find themselves in a crowded space, having patents is the only thing that will allow them to raise new financing necessary to continue growing. The problem is that without an objective analysis of a startup’s technology, investors are unlikely to bet on a David challenging Goliath.

Early stage companies take enough risks. They do not need to add additional unnecessary obstacles. Without patent protection, the reward for creating a technologically innovative business is exponentially small compared to the exorbitant risk. Why should startups innovate if their innovations can’t be protected?

[Additional writing by Michael Carney]

[Illustration by Hallie Bateman]