"AI wrappers have no moat." You've heard this critique from VCs, Twitter pundits, and competitors alike. The argument goes: if you're just building on top of GPT-4 or Claude, what stops anyone else from doing the same thing? But this analysis misses a crucial point—patents can protect the genuine innovations that make AI wrapper products valuable, creating defensibility that outlasts any API access advantage.

The Moat Misconception

The "no moat" critique assumes that calling an LLM API is the entirety of what wrapper companies do. In reality, successful AI-powered products involve substantial technical innovation: sophisticated prompt engineering, multi-model orchestration, domain-specific validation layers, custom fine-tuning, retrieval-augmented generation architectures, and novel user experience patterns.

These aren't trivial implementations. They represent months or years of R&D, hard-won insights about what works in specific domains, and genuine technical breakthroughs. The question isn't whether this innovation exists—it's whether you're protecting it.

What's Actually Patentable

While you cannot patent the use of an LLM generally, you can patent specific technical implementations that solve concrete problems. For AI wrapper companies, patentable innovations often include:

• Multi-step orchestration systems that coordinate between different AI models, databases, and external services to accomplish complex tasks
• Domain-specific validation architectures that verify AI outputs against industry rules, regulations, or quality standards
• Novel RAG implementations with unique retrieval strategies, chunking approaches, or re-ranking methods tailored to your use case
• Error detection and correction systems that catch and fix hallucinations or inaccuracies before they reach users
• Hybrid architectures that combine multiple models, traditional algorithms, and rule-based systems in novel ways

The Strategic Advantage

Patents transform the competitive dynamics of AI wrapper businesses. Instead of racing to add features that competitors can copy in weeks, you're building a portfolio of protected innovations that competitors must design around—or license from you.

This matters especially as the market matures. Early-stage competition might be about speed and execution, but as markets consolidate, IP portfolios become decisive. The companies with strong patent positions will have leverage in acquisition discussions, partnership negotiations, and competitive disputes.

Building Your Patent Strategy

Start by auditing your technical stack for genuine innovations. Where have you solved problems that others haven't? What approaches did you develop through trial and error that aren't obvious from first principles? These are your potential patent candidates.

Work with patent counsel who understands both AI technology and the wrapper business model. They should help you identify innovations you might overlook—often the most valuable patents come from techniques that feel "obvious" to your team precisely because you invented them.