Why you should patent your invention…
Most successful businesses, large and small, are built on well managed intangible assets or intellectual property (IP). Pizza Hut, KFC & McDonald’s have all used their IP to establish franchises across the globe, while Coca Cola’s secret recipe and trade mark logo have stood the test of time and kept their product on the shelves.
Patents provide for the generation of ‘prior art’ to protect a company from patent infringement law suits. An active patent program provides a reservoir of prior art, which prevents others from receiving patents which may exclude a company from practicing important technology and processes.
The value of a company’s IP, whether it’s a trade mark, patent, design, copyright or trade secret, far outweighs the value of their physical assets. Company valuation relies greatly on these intellectual assets. Today, the capital assets of Fortune 500 companies account for only 15% of the company’s value, whereas intellectual assets like patents, account for 85% of the company’s value.
How to put a value on your IP
Once you have conducted your IP Audit, you should value your IP assets as you would your physical assets. For example – your customer list or database can be a competitive intangible asset you should identify and protect. A secret recipe, a unique service technique, or a technological approach also falls into this category.
To begin with, you should try to calculate the time it would take you, or anyone else to develop these assets from scratch, or estimate how much a competitor might pay for them. We discussed companies ‘buying in’ services and skills in our previous blog ‘Disruptive v Sustaining Technology’.
Why would a business want to pay for a license to use someone else’s IP?
- Reduces internal research and development cost
- Time to market – why re-invent the wheel
- Accessing expertise that it does not have in-house
- Obtaining competitive advantage
- Collaboration – working together to develop new products and services
What is the patent application process?
To obtain a patent, a patent application has to be filed, describing the invention in technical terms detailed enough to enable a person of skill in the particular field to understand the invention well enough that he or she could ‘practice’ the invention. The application also has to meet certain legal requirements. The Patent Office of the country in which the patent application is filed ‘examines’ the invention described in the patent application for novelty and inventiveness. The examination may take two or more years and is an iterative process of reviews, responses and re-reviews. This is a normal process. Not protecting your IP, could mean you could invest substantially in your business, only to have the ‘rug pulled’ from underneath you by a competitor who has followed the patent process and secured the rights to stop others from making, using or selling those same intellectual assets.
There is, of course, a fee payable to the Intellectual Property Office but once granted, patents can give you protection for 20 years, provided renewal fees are paid each year.
How should I go about licensing my IP?
When a licensor licenses the right to manufacture and sell products, the licensor receives revenues from that licensing but does not take the risk of manufacturing, promoting and selling those products. On the other hand, the licensee has the right to use the IP without the expense and risk of the research and the costs of developing the product.
Talking to the larger manufacturing brands, who already have established channels to market, and much bigger marketing budgets, is a good place to start. This is not a quick and easy route however, and it takes much persistence and patience, as you will not always be high on their priority list. That said, if your technology and approach is markedly different or unique, these types of partnerships can be extremely fruitful on both sides. Creating demonstrable prototypes to show off your technology, is a powerful and practical way to get your point across, early on.
Martin Boddy (Managing Director, Convert Technologies)
“Not having patents is certainly NOT a show-stoppper – from our perspective, it is the knowledge and time taken to create all of the hardware and software that is the key. Surprisingly, not many companies have patents, as it is difficult to find new areas of development that others haven’t yet explored. It is also a very expensive process to go through, but when you weigh up the value of IP versus the costs involved, it’s a no brainer. The bulk of the costs associated with patents, are the legal counsel fees to draft and file the applications, along with the specialist advice provided throughout the process.
Even some Universities we are working with, employ their own internal IP specialists but not all of their ideas reach the point of commercialisation. We have some strong opinions on this subject, which you will find in a forthcoming blog on ‘Universities & IP Commercialisation’.
Here at Convert, we have managed to secure several patents already in the US, with many still pending since over two years.
This is quite normal and in fact only last month we received the Patent Certificate (Internal No. 2914-P104-US-1), which has been awarded for our VOC-AL amplification technology.
We are currently in license negotiations with several global brands, so are very excited about the prospects of seeing our technology making a difference to people’s lives in the not too distant future.”
#patents #innovation #licensing #protectyourself #collaboratewithus
Source References: Intellectual Property Office, Patent Image – Arcady/Fotolia, UK Business Insider