The argument to patent or not is as old as patent law itself. Apart from the simple reason of idea protection, patents can serve as additional value-add when it comes to company positioning as well as thwarting competitive pressure. More important to capital transactions, it can serve as a value-add for investors looking to infuse growth equity or acquire the business behind the protected idea. Here some additional reasons why patents make sense.
1. It is easier to speak freely and disclose ideas and inventions when said ideas and inventions are already covered under the protection of the given patent. When it comes to investors, it is easier to bring in more “potentials” when said potentials are not required to first jump through the hoop of an NDA. In fact, many venture capitalists refuse to sign NDAs.
2. The rigors of the patent filing itself provide a disciplined environment that allows for more in-depth thinking about the product, service or idea. This type of critical thought allows the ideation team to truly immortalize all the finer points of why the patent matters and why it is unique. This is important as it relates to business strategy once the patent’s protection is actually used for its originally-intended purpose.
3. Additional human and capital resources can be brought into a patented project than a non-patented one, partly because there is no fear of betrayal and partly because there is no fear of competition.
4. Ownership lines are clearly defined. This helps to prevent and clarify potential future conflicts.
5. If properly-written with the right protections, patents can be a great barrier against reverse engineering and can ultimately provide the monopolistic power businesses love.
Patents should always be a default when an idea is used in a commercial situation. Unfortunately, and most often, patents are not immediately filed by entrepreneurs with great ideas. The most frequent excuse is either ignorance to the process, timing and/or costs constraints. For the right ideas, a quality patent attorney is worth his/her weight in gold when it comes to protecting an idea or securing a foothold in a given market.
Not only have entire businesses been built around patents, they are also protected by the same. In fact, when it comes to mergers and acquisition, some deals have been specifically solely for the intellectual property attached to the deal. In addition, large patent portfolios represent huge protection and revenue opportunities for companies. In a business valuation scenario, a patent can be the difference between a standard valuation and a premium.
If your business operates doing something unique or even something boring, but with a unique twist, it is advisable to patent the uniqueness or the process to ensure the business value is eventually maximized and protected from other entrants.