Do I need to apply for a patent?

I would advise against getting a patent. We initially thought about getting a patent for our software product, but decided against it because of the following reasons:

1. Cost of obtaining patent: It’s extremely expensive to get a patent. This is not one of those things you can do alone. You need to pay an attorney to do this, which means expensive attorney fees. When I was looking into it, a local patent attorney gave me an estimate of tens of thousands of dollars. And this was just for a patent valid in the US. He said for an international patent it could be as much as $75K!

2. Time: Your time is better spent working on your product, and getting it out the door quickly. Time and energy spent on patent issues is time not spent on your product. And for us it was more important to focus on building the product than obtaining a patent.

3. Cost to protect patent: Let’s say you do spend the $10K - $50K it’s going to take to get your patent, and you do succeed in getting it (after maybe 5 years of your initial filing). What happens if someone does infringe? Well you have to sue them. And that’s going to take another ton of money – just about anything that involves lawyers will be expensive. Are you prepared to spend yet another $50K (and I'm being conservative here) to defend your patent in court if it does come to that?

4. Ease of bypassing your patent: From what I’ve read, software patents are actually pretty easy to bypass. Meaning that someone can come out with a similar competing product without actually infringing on your patent. There is nothing you can do about that.

In my opinion, the only time it may make sense to get a patent is if you are planning on getting VC funding, because this is something they look for.

You can get a provisional patent, which only costs about $100 to get. But it only lasts for a year, and is pretty much worthless unless you plan on following up with an actual patent filing. My advice is to not waste your time on either.

Also see these other patent related questions:

Filing a Patent

What are the particulars of registering a software patent?

To what extent are algorithms patentable, esp. in the US and Europe?

How can startup be ready to defend IP/Patents if/when a competitor does infringe?

How do you protect the key features of your product without a patent?

Should I Bypass a Patent Search at this Stage of Product Development?

There are lots more questions on this site about patents, just search for the patent tag.

EDIT:

will the $100 provisional for a year, deter any possible competition from entering the field? I'm not necessarily looking to litigate with anyone, but use it as a way of deterrence?

The short answer is no, not in the long run.

The long answer: Claiming patent pending may deter a fraction of the people that would otherwise "infringe" on your patent. The problem is that it will not deter everyone, so you are back at having to spend tens of thousands of dollars to defend your patent. The reason it won't deter everyone is:

1. There is no guarantee that you will actually be awarded the patent. So some may take the risk, assuming you won't get it. And getting a patent can take a long time (several years).
2. More importantly, a provisional patent is only good for 1 year. The purpose of the provisional patent is to give you time to file for a real patent, because filing for a patent takes a lot of time and money. If after that 1 year period you haven't filed for a real patent, you have nothing, and people are free to file for the patent themselves. Further, the information you provided in the provisional patent becomes public information. People can read your provisional patent, and are even free to file their own patent based on that information.

Think of it this way, obtaining an actual real patent doesn't deter everyone from infringing on someone's patent. We know this because patent lawsuits exist. So why would we expect a $100 provisional patent to deter everyone?

If all you are looking for is a 1 year head start, go ahead and get it, if it'll make you feel better. Just realize that after that 1 year, all bets are off, and you have absolutely no claim to it. Also, don't expect it to deter everyone from copying your software. You may luck out, and not have anyone copy it during that 1 year timeframe, but that doesn't mean it had anything to do with the provisional patent. It could just be that no one is interested in that right now, which means you would have been fine without the provisional patent.

EDIT 2:

I just ran across this blog post on Provisional Patents. I thought it might be useful if you decide to pursue it.

I hope this helps!