Why File for a Patent?

It can take several years and cost thousands of dollars to obtain a patent. So, why should you go to this expense and effort, and take on the additional risk that a patent may not ever result from it? Well, there are many good reasons to obtain patents. The more substantial ones (in my opinion) are listed below. However, if none of these apply to your situation, or in your opinion do not justify the time, expense and risk involved, then it may be that patents are not for you.

Reason #1:    Prevent a competitor from practicing the invention

A patent is a grant of a bundle of rights with respect to an invention, and the most widely known of these rights is the right to exclude others from practicing the invention as claimed in the patent. A company that hires engineers or scientists to conduct research and development, prototypes and tests products, and successfully establishes a market position does not want its innovations to then be copied by its competitors. It is the market exclusivity a patent provides that many times justifies spending the effort and capital it takes to bring innovations to market.

Reason #2:    Revenue from sale of application or patent

Once a patent application has been filed, even before a patent has been granted, ownership and title to the application can be assigned and transferred to another party. This is just one of several ways that an application or patent can be a source of revenue to an inventor, applicant or patentee. For example, an individual inventor may not have the resources necessary to prototype, test and market an invention, but the inventor can still profit from the invention by selling an application or patent covering the invention to another party. As another example, a company can monetize all or part of its patent portfolio by selling applications or patents that cover discontinued product lines, or are directed to markets that the company is not interested in.

Reason #3:    Revenue from licensing application or patent

It is quite common for a company to license its applications/patents to other parties, event to direct competitors. The company receives royalty payments in return for the licenses, and so this is another way in which the company can reap a monetary reward for its innovation efforts. Cross-licenses can result from infringement litigation between competitors, if each party has an application/patent covering an invention that the other party wishes to practice.

Reason #4:    Revenue from infringement litigation

If an infringer refuses to cease infringing a patent, and is unwilling to obtain a license under the patent (or the patentee does not wish to offer a license to the infringer), then litigation may become a necessity to force the infringer to stop infringing, and/or to obtain compensation for the infringing activity. Thus, this is another way in which a patentee can obtain revenue from its patents.

Reason #5:    Enhance business valuation

The perceived value of a technology-based company is greatly enhanced by a robust patent portfolio. Stated differently, a company looking to acquire another company will typically pay more, if the target company has its innovations well covered by broad patents that protect its market position. On the other hand, a company that does not protect its innovations can quickly lose its market position, and will therefore have a lower perceived value.

Reason #6:    Enhance business reputation to customers

Customers will view a company that regularly obtains patents as being technologically advanced and able to offer creative solutions to their problems. In fact, companies in various industries are ranked yearly by their technological strength, and numbers of patents obtained figure prominently in this ranking. A company’s patent portfolio is a testament to whether or not it is on the cutting edge, or merely a “me too” player in the market.

Reason #7:    Enhance personal reputation to employers

Similar to the manner in which customers favorably view companies with robust patent portfolios, employers also favorably view prospective employees who are named as inventors on a number of patents. All else being equal, would you rather hire an individual who has a proven track record of innovation, or an individual who does not?

Reason #8:    Product or service sales

A patent is an effective sales tool, because it tells a prospective customer that the product or service has met all of the requirements for a patentable invention—it is new, useful and innovative. Many customers will understand a patent as a certification or “seal of approval” by the government that issued the patent. In some cases, a customer will pay more for a product or service that is patented, than for an unpatented product or service.

Reason #9:    Ego

Of course, ego is not necessarily a bad thing. We all have a sense of pride when we receive an award for a notable accomplishment. Because patents are awarded only for inventions that meet rigorous standards, inventors are justifiably proud to be named as such on issued patents.