Pink Shutter Photo Booths on Shark Tank

Pink Shutter Photo Booths recently went on Shark Tank to pitch their photo booth company to the Sharks.  See Shark Tank S04E24 Episode 425 (May 10th, 2013).  This episode illustrates the importance of acquiring patent protection for a new and useful technology (here at least a larger, more versatile photo booth).

Notably, the entrepreneurs get off to a good start by getting the Sharks interested in their product.  Their financials also appear to be headed in the right direction.  The company is profitable. They own all of their assets.  They have no debt.  But, then things take a turn for the worse.  The Sharks inquire about patent-related features of the technology.

First, the Sharks ask about what makes the Pink Shutter Photo Booth different.  See embedded video below at 2m 26s.

Notice how this question gets to the issue of what gives Pink Shutter a lasting advantage over their competition.  Although Pink Shutter is enjoying success, the company has nothing to prevent competitors from entering the market and undercutting them.  They have no property right.  They have not ownership of their invention.  This point is really driven home about a minute later, when Kevin O’Leary points out that Pink Shutter has nothing proprietary.  See embedded video above at 3m 30s.

On account of Pink Shutter failing to protect their invention by drafting patent claims and filing a patent application, the Sharks immediately devalue the company.   Ultimately, Pink Shutter does strike a deal.  But the critics posting on their blog feel that it was not a good deal:

Man, I think you got screwed. 33% split three ways is going to be tough. Not to mention giving Groupon and Living Social up to 50% commission. In 5 years when you start to make your money back from the investments, the competition will be 10 times what it is now. The mom and pops photo booth companies run by one person will be able to make the same income as you guys because you are splitting your money too many ways. Just my opinion.

Lesson learned: if you have something new and better than the competition, keep it that way.  Use the patent system to protect your invention.

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