Invention and Patent – Reasons for patenting an invention
1. Competitive edge, market power and earning more money
When you are able to use a patented invention embodied in a technology in your business, it is likely to improve your market power, provide your business with a competitive edge, and help you to make more money.
A patent provides protection when you disclose your invention publicly. For example, it would enable you to go to a fair, exhibition, or an industry trade show and display it without fear. It also enables you to go to a wholesaler or distributor and say with confidence that no one else in that market is allowed to make, sell, use or distribute your new or improved product without your express approval. This may either diminish, or eliminate competition. If that happens there would be typically increased sales, and if marketed properly, you may be able to charge a higher price because your competition is barred from offering an equal product. So, whenever you are able to use a patented invention embodied in a technology in your business, it is likely to improve your market power, provides your business with a competitive edge over competitors, and help you to make more money.
2. Add New Revenue Stream
You may be able to add a new revenue stream by licensing a patent, or better still, a portfolio of your patents.
3. Raise funds and attract potential investors
a. Patents may be bought, sold or licensed.
b. Patents may also serves as collateral for bank loans.
Patents may attracts potential investors to your company, as they are happy to see some type of barrier to entry for competitors, which may not only protect your investments in R & D and, thereby, improve the return on your investments, but also may provide income through licensing of your patents to others.
Most venture capitalist, investment bankers, financial analysts, and other investors favorably recognize the value of a patent.
4.Bargaining Chip for Securing “Freedom to Operate
A patent application, a patent or a portfolio of patents, is not only an asset for earning licensing revenue, but it is also often a valuable trading or cross‐licensing asset if your patent is faced with a dominating senior patent and/or complementary patents. It can also be used as a bargaining chip during licensing negotiations with a competitor or when you are accused by another of patent infringement. Generally, when such negotiations result in a stalemate, the two sides agree to cross‐license their patent portfolios to each other, with little or no need for exchanging money.
So, a company, such as yours, may wish to obtain patents simply to defend itself against your competitor's patent portfolio, even though you may not want to take, or be capable of taking, any offensive action by relying on your patent portfolio. In other words, it improves your freedom to operate in the marketplace. The principal goal of a defensive IP strategy should be to obtain the freedom to market planned products. This process requires the identification and neutralization of any patent infringement risks.
5. Selling the invention
Having a patent means you have a tradable asset which can therefore be sold. Generally, a large company will not agree to even talk to you unless one or more patents protect your technology or at least you have filed a patent application to protect your invention. It could be that your talks with a potential buyer end in failure. If that happens, you may need a way to stop such a party from stealing your idea, especially if a confidentiality agreement had not been signed or, even if such an agreement had been signed, if the other party acts in breach of it. Having a patent and thus the right to exclude the others enables you to take preventive action
6. Strategic Partnerships, Mergers and Acquisitions, IPO, and Higher Sale Price
A patent or a patent portfolio may provide substantial value for entering new markets through strategic partnerships, or in mergers and acquisitions, and for getting a start‐up company listed on the stock exchange through a good initial public offering (IPO) or for getting a higher sale price of an established company.
In fact, one of the most valuable assets that a technology company could have is a portfolio of patents consisting of patents that may be owned, co‐owned or licensed from others.
7. Convoyed sales
When a customer goes to a shop to buy one item, he often ends up buying other related items. Similarly, when a customer is attracted by a patented improvement of a product, increased sales of non‐patented articles may follow. This happens when the patented product is a component of a more complex product or the patented product is sold in association with other products. These types of linked sales are known as add‐on, collateral, derivative, follow‐on or convoyed sales.
8. Basis for Recognition and Rewarding Employees
A patent allows you to recognize or reward the tangible achievement to your inventor‐employees.
9. Part of Branding and Marketing Strategy
Not only employees, but also your product or even your whole business could use a patent or a portfolio of patents to signal higher technological capabilities, greater innovative abilities and superior performance, in your advertising, marketing and branding strategies.
For further information, please follow the next contents, explore the world of intellectual property and chances that intellectual property may bring to your enterprise.
