Back to: Navigating the Patent System
The patent enables inventors to level the playing field against larger competitors. Inventors may use their exclusionary rights over an invention to create a “barrier to entry” (i.e., block others from competing in the market with their version of a competing product) against their competitors, increase their revenue, and even threaten large corporations with patent infringement if they infringe on the inventor’s patent.
Barrier to entry
The first benefit of an exclusionary right is that it erects a barrier to entry so that others cannot compete against the inventor by introducing the patented product into the marketplace. If competitors do enter the market, the inventor can utilize the patent against competitors and make them “disgorge” (i.e., give back) profits and enjoin them from engaging in (i.e., stop further) sales and marketing efforts.
However, a patent is not immediately granted upon filing a patent application. Rather, the patent right “vests with” (i.e., is conferred upon) the inventor when the patent application matures into a patent, which could take from nine months to five years. In the meantime, while the invention is patent pending, competitors can appropriate the invention without penalty. Once the patent is granted, the inventor can sue the competitor for patent infringement, collect damages, and enjoin the competitor from continuing to market the patented invention.
Although the inventor cannot sue the competitor immediately after filing the patent application, this is not a good reason to forgo patenting the invention. Filing a patent may be an important part of a successful business plan, despite the length of time it takes for a patent application to mature into a patent. For example, competitors marketing the invention before the United States Patent and Trademark Office (USPTO) has granted the patent may later become licensees that must pay royalties on the issued patent. Competitors who market the invention before the patent issues also help create a demand for the patented invention, which may benefit the patent applicant when the patent is granted and these competitors become potential licensees. However, if it is critical that the patent mature as soon as possible, there are ways to shorten the period between the filing of the application and its examination. (This is explained in Chapter 7, which covers the overall patent process.) Be warned that if an inventor begins marketing a product without seeking a patent, he or she will eventually forfeit the ability to secure a patent and the invention will be dedicated to the public. (Please see Chapter 5 for more information regarding such bars to patentability.)
If there is a large enough demand for a patented invention, the patent itself may increase the gross revenue of the product. If an invention is not patented, competitors may enter the marketplace offering products similar to the invention. When this happens, prices drop because competitors are trying to make their products more attractive to potential consumers. However, if the invention is patented, competitors can be sued for patent infringement and enjoined from selling the product in the marketplace. Therefore, competition is reduced and the inventor may theoretically charge a higher price for the product until the patent expires.
Leveled playing field with large corporations
In the marketplace, large corporations often have many advantages over those of a small companies. They have funding, marketing relationships, distribution channels, and expertise beyond those of a small company or solo inventor. If a small company or solo inventor were to market the same product as a large corporation, the small company or solo inventor would likely lose to the large corporation, which would capture more market share of the product.
However, if a large corporation were to introduce a product that infringed on a small company or solo inventor’s patent, the patent owner would be able to sue the large corporation for patent infringement. Although the cost of patent litigation is high, there are contingency fees for patent litigators that can reduce the financial burden of this litigation.
With these benefits in mind, I will enumerate and explain the Seven Core Concepts, which, in conjunction with the counsel of a patent attorney, will help inventors decide how to best protect their invention.