The Benefits of Patenting Inventions
You may want to patent your inventions. But why? Are you an entrepreneur in High tech? You may have a passion to launch a software startup or a new website or even a new kind of consumer electronic device like a video or camera phone.
Whatever your dream product, consider patenting any original, novel aspects by either filing a provisional or a full patent application at the US Patent Office. Why do this?
1) Patent your Inventions to Get Ahead in your Market
Well lets first consider what a patent provides you. A patent is an invention right that allows you as the inventor to actually freely use the invention you have created for the benefit of your business. But its more than that. A patent can be a strategic business tool that is used to prevent others including your competition from using your patented invention.
This prevention could enable you to get ahead and stay ahead of your competition. Supposing your chief competitor starts to use your invention and you can prove this, then they can be stopped from proceeding further unless they
- pay you some kind of licensing or royalty fee or
- develop a solution that does not utilize your invention – this could involve significant investments in time and money for the competitor, helping you, yet again steal a mach on them or even directly benefit your income stream as a result.
2) Selling a Patent to Generate Revenues
The other way to get a benefit from having a patent is simply that the patent, once granted may have an intrinsic value to it. For instance let’s imagine you have a patent that describes a new kind of way of paying sales people commissions by doing calculations across the web and over the cloud. Let us suppose that pretty soon this method starts to gain momentum and other companies start to use this novel way of paying sales commissions. Let us further assume the companies are infringing your patent because they are using the same approach which is described by you! Then, your patent may have significant value to these companies.
A patent may well sell for double or triple the amount invested in creating it. A famous multi-billion dollar sale of patents is Nortel.
3) Credibility
Ever noticed that “patent pending” label on some consumer product you are using (maybe a lubricant for your car, or a shampoo?). Why do manufacturers do this?
Well, the third advantage of patenting your invention is the credibility it gives to you and your product. This might make your users or buyers look much more favorably upon your product.
4) Enhancing the Corporate Value
And, if you are seeking investment to fund your startup or even eventually selling your company as an exit strategy, having patents will be seen as
- a) providing a barrier to entry to competitors and
- b) increased marketability to customers and could result in a higher valuation of your company either pre-funding or when its being acquired.
One fairly large example of a corporation puffing up its value to a significant buyer is Motorola mobility, acquired by Google for $12.5B !
All in all, patents are a great investment for you and your company and product and if you have a novel invention and haven’t already patented it, I advise you to get cracking!
