The benefits derived from a patent may include:
1) Prevents theft of the invention: Inventors and start ups may initially seek a licensing deal or an investor for an infusion of cash. In order to attract licensees and investors, the invention must first be disclosed so that the potential licensee or investor can evaluate the deal. If no patent application is filed, then the investor or licensee may reject the offer to license or invest but turn around and file their own patent application. Any application file by the real inventor will be later in time. As such, the Patent Office will award the patent to the licensee or the investor, instead of to the real investor. By filing the patent application and obtaining patent pendency, any application filed by the potential licensee or investor will be later in time, and thus, junior to your patent application.
2) Higher Profit Margins: A U.S. Patent permits its owner to exclude (i.e., stop) others from making, using, selling, offering for sale and importing the invention into the United States as claimed in the patent. Presuming that there is a market demand for the patented product, the ability to exclude others reduces the supply of the product or process in the marketplace. As a result, patent owners may charge higher prices for the patented product or process.
3) Reduce Competition: Patents may also serve as a barrier to entry for competitors who are contemplating entering the market for the patented widget or service. Competitors may consider the risks of patent infringement greater than the rewards of potential profits. Also, patentees may assert their patent(s) against competitors to enjoin them from offering a competitive product.
4) Encourage Settlement: During litigation, both parties will assert various claims against each other including patent infringement. In certain instances, two patent owners may agree to cross license the respective patented technologies to each other instead of litigating the issues.
5) Expand Market Share: Patented technology may be licensed to others in a different geographical market or in a different market. For example, a patent owner doing business solely in Orange County, California could license patent rights to a company with a market presence in a different county or state. The patent may provide the patentee, now licensor with regular royalty payments for sales of the patented product or process outside of the patentee’s normal geographical market. Additionally, patented technology may be licensed to others in a different technical field. For example, a manufacturer may license a patent to a retailer while retaining patent rights for the manufacturing market.
I invite you to contact me with your patent questions at (949) 433-0900 or [email protected]. Please feel free to forward this article to your friends. As an Irvine Patent Attorney, I serve Orange County, Irvine, Los Angeles, San Diego and surrounding cities.