A patent is a legally enforceable right granted for a new or inventive device, substance, method or process that provides exclusive right for the holder to commercially exploit their invention for the life of the patent (IP Australia). We all have ideas, and as the late Robin Williams once stated ‘no matter what people tell you, words and ideas can change the world’. Great ideas have the capacity to solve a market need and create significant wealth for the inventor. However, with the risks involved, insufficient resources and the strong resilience required for commercialisation, very few ideas become truly profitable opportunities. Many individuals choose to patent their idea – an expensive exercise that won’t necessarily lead to commercialisation. In fact, 97% of all patents never make any money. Whether a patent is an asset or liability is a question that all inventors need to carefully consider. Let’s take a look at the pros and cons of owning intellectual property:
Limit the Competition
Patenting an idea can assist a business in limiting the competition. It prevents other parties from manufacturing and/or selling your invention in jurisdictions in which a patent has been granted. It also allows users to undertake license agreements or to take legal action on the grounds of unauthorised use. Therefore early market entry may assist businesses to establish dominant market share and establish a monopoly.
The exclusivity that accompanies patents, grants the holder with the potential to earn revenue from licenses or sale. As mentioned, licence agreements allow other parties to use the technology in return for an upfront license fee plus royalties. This is a common avenue for commercialisation of medical device and surgical device inventions. Although a patent is an intangible asset, it can also be sold upon valuation of its worth.
Having a patent can add credibility to your product if your company decides to apply for commercialisation grants to raise much needed capital. The novelty or innovative aspects of the technology can be critical to meeting eligibility criteria for the success of a grant. This is of particular importance to ICT (information and communications technology) projects where inventions relating to software and web development activities are deemed ‘day-to-day’ rather than innovative. A patent supports the idea that your product is novel, useful and of potential commercial value.
Patents are not cheap and can become an expensive exercise. Application, examination and maintenance fees can accumulate to thousands of dollars worth of fees over the life of a patent. If any of these fees aren’t paid, the application will not be granted or the issued patent will expire. Consider whether the value of your technology exceeds the time, effort and cost in filing and maintaining an application.
Some patents require public disclosure of the intricacies of an invention. This exposes the product to potential infringement or parties improving upon the original idea. The limited life of a patent may also place undue pressure for businesses to make enough sales to sustain the operations of a business.
Unwanted lawsuits can be associated with patents. Consulting patent attorneys about the legal ramifications of potential lawsuits from competitors is a necessary endeavour. Competitors may try to invalidate a patent or you may need to sue another party for infringing upon your patent.
Ownership of an idea can be a complex exercise. At Inner Maven we can assist entrepreneurs and inventors to devise a patent strategy that suits their commercial goals. Patent strategy development is essential to the protection of your technology. If necessary, we can also direct you to specific patent attorneys that specialise in your area and have the necessary skills we deem appropriate. Don’t start the commercialisation process alone!