What is a patent?
Good question! There are a number of legalistic answers usually given to this question, based on the fact that a patent is temporary monopoly granted to the creators of useful inventions. But the real answer is that a patent is a business tool. Like many tools, there is a cost to obtaining and maintaining a patent. However, a patent is a tool with a number of very useful buisness functions:
A patent gives you monopoly rights - as Peter Thiel famously noted “competition is for losers”. One way of not being a loser is by using a patent to block your competitors. A patent can give you up to twenty years without competition to reap the rewards of the resources you invested in research and product development.
A patent is an asset that can be used to attract funding - a patent is a type of intellectual property and intellectual property is a type of property. So a patent is an asset that sits on you balance sheet and can be used e.g. as collateral for a loan and can be mortgaged. It also provides a tangible measure of research and product development output. Patents allow you, and more importantly potential investors, to assess of how effectively a you are producing innovative ideas and provide an excellent way of recording and organising these inventions.
Patents give you offensive control over your markets - with well-planned and sophisticated patent filing strategies, you may be able to control your own commercial destiny. This involves trying to predict the future in order to shape it using patents. This process - where you examine your product plans, and those of your competitors is called “Strategic Patenting”. The initial questions asked in this process may include: Where is the market heading? Will your patents protect you there? Who is suing who in your market and what ideas should you stay away from? When will your patents expire and how will you then protect against knockoffs? Strategic patenting, then, is simply the confluence of patent law (what can be patented and how) and project management, with quality assurance ideas mixed in.
Patents provide you with a defensive bargaining chip - your competitors can also file patents. Since they can completely exclude you from using your innovation (if your innovation infringes their patent), the mere payment of money to them may not be sufficient to enable you to stay in business. Often exchanging patent rights using the threat of a patent counterclaim (i.e. if you sue me for infringing your patent, I’ll sue you for infringing mine) is the only way for you to coexist with an aggressive competitor. Without having patent rights to exchange in the event that you find yourself the target of someone else’s patent, you are left fighting your battles with a butter knife – you’re toast.
A patent protects you from losing an invention - it is remarkable how often inventions unexpectedly leave businesses. As noted above, a patent is a form of Intellectual property – and as with all property, it’s a good idea to secure it. Like an unlocked bicycle, an unsecured innovation may not be yours for very long. A patent can be used as a lock to explicitly secure your innovation to your business. This prevents ex-employees, customers, competitors, and random strangers from taking your innovation as their own.
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