Protecting Innovation

Profession:Barker Brettell

Why Do I Need Patents?

This is a question that large and small businesses, private inventors, academic institutions and investors regularly ask themselves. I have heard a variety of different answers including "to protect and encourage innovation", "to exclude competition", and even "to obtain kudos through publication". While all of these may to some extent be true, all too often the bigger picture is overlooked. The answer should of course be "because they will make me money".

The purpose of the patent system is to provide an opportunity for a patentee to prevent third parties from using his invention to their advantage. However, it is only an opportunity, and as a patent attorney a good deal of my time is taken up helping those who have squandered this opportunity or are on the verge of doing so. The fact is that the patenting process is a fragile creature which requires careful handling and maintenance if it is to be used to one's advantage and not to become a burden to the proprietor. When used correctly, however, a technology protected by one or more patents can be an extremely powerful commercial weapon, and the number of success stories is endless.

How a patentee uses his patents depends on many factors. For example, the size of the company, the means or desire to exploit the invention, and general business strategy all contribute to the way in which a patent portfolio is managed and wielded. A patentee may choose to exclude all others from the market, thus maintaining exclusivity and allowing a premium to be charged for the commercial product protected by the patent. A patent can maintain a greater market share than if competitors could copy a product more freely. Dyson is one such company that has sought exclusivity by successfully suing anyone attempting to copy its technology. Alternatively, the patentee may choose to licence others to use the invention, thus obtaining remuneration through a royalty stream. A good example of this is the Philips Compact Disc technology. A number of patentees choose to sell their patents.

A strong patent portfolio is becoming increasingly important to young businesses and start-ups. I have been involved in raising significant capital for new companies based on a business plan underpinned by a strong patent portfolio. Investors and purchasers naturally look for any reason to lower the value of a target company, and will scrutinise an IP portfolio for any exploitable weakness. By...

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