THE VALUE OF PATENT APPLICATIONS FOR HIGH-TECH COMPANIES

In an earlier post, we explained why a high-tech business needs patents — that is, issued patents that can be enforced.

But there’s a value dimension that we didn’t explore in that post, and it’s one that the most successful tech companies know well and utilize extensively — namely, that the patent application itself is a valuable asset.

Here’s the thing: a robust patent process adds enormous value to a tech company, even when the company and its executives have no intention of enforcing or licensing patents. And there’s a greater degree of certainty in this value component because it doesn’t depend on the patent examination process.

Here are six ways that filing patent applications can benefit your high-tech business.

REASON #1: DOCUMENT OWNERSHIP OF INNOVATIONS

In most tech companies, the company owns all innovations developed by the company’s research and development (R&D) activities.

But if the company doesn’t properly document ownership of the innovations:

• The inventors could potentially leave the company and file their own patent application — leaving you with little recourse.
• You’ll be less likely to attract investors if you can’t show that you own all of your intellectual property (IP) assets.

Accordingly, many companies use the patent process to document ownership of innovations, primarily by having their employees submit invention disclosure records (IDRs) as part of the company’s patent program.

DOCUMENTING OWNERSHIP USING IDRS

Any time an innovator has a valuable idea for a product or service, solves a problem, designs a new product or component, or reaches a useful technical result, they should submit an IDR to the company’s patent committee.

Even if you don’t end up filing a patent application, you can still use the IDR itself to document the pertinent information surrounding the innovation, and establish the company’s ownership of it. For example, some IDRs may remain confidential — becoming trade secrets.

But the most valuable IDRs typically become patent applications. After the patent application is drafted, the innovators will execute a formal assignment to the company. The assignment will then be recorded with the patent office where the application was filed.

A patent application, together with the formal assignment, provides the best way of establishing ownership.

REASON #2: DEFEND YOUR WORK AGAINST COMPETITORS

When your patent application is published, it can be used as prior art against competitors as of its filing date. So even if you don’t pursue the application all the way to an issued patent, your published application can prevent someone else from getting a patent that covers your technology (assuming they file their application after yours).

Conversely, if you don’t file a patent application, and a competitor independently develops a similar invention later, they might be able to get a patent and prevent you from using the invention — even if you had it first!

REASON #3: ENCOURAGE INNOVATION WITHIN YOUR BUSINESS

The patent application process enables you to reward and recognize innovation by your employees.

For one, by publishing your patent application, you can give innovators “public” credit for their contributions. Many scientists and engineers list their published patent applications on their resumes and LinkedIn pages, and use them to demonstrate their expertise and value as an employee.

For another, you can incentivize employees to reach significant patent milestones by offering cash bonuses, stock options, or public recognition.  Important milestones may include submitting an IDR, filing a patent application, or actually getting an issued patent.

These incentives, which are created by a robust patent program, encourage employees to develop innovations and disclose them to the company.

REASON #4: GAIN A COMPETITIVE EDGE IN YOUR INDUSTRY

Even if you don’t plan to enforce your patents in court, your patent applications can still fulfill several competitive functions.

CONFUSE COMPETITORS WITH MISINFORMATION

You can file patent applications for approaches that you’re not using, whether because they didn’t work or didn’t turn out to be optimal.

That way, your competitors have less ability to use your published applications to figure out which of your innovations are actually commercially viable.

DIVERT COMPETITORS’ RESOURCES 

Once your application publishes, you can further inconvenience your competitors by forcing them to confront the risk of infringing your patent.

For example, your application may describe something that your competitor has been planning to use in their own product. In that case, your competitor will need to spend time and money developing a strategy to avoid your patent application. Diverting your competitor’s resources and attention can give you a competitive edge — especially in a fast-changing, high-tech market.

REASON #5: BOOST YOUR MARKETING PROFILE

By committing to the process of filing patent applications, you’re showing customers that your product has commercial value — which, when combined with thought leadership and other marketing tactics, helps establish your company as an industry leader.

REASON #6: ACCESS LICENSING AND COLLABORATION OPPORTUNITIES

Patent applications can generate licensing deals, revenue, and collaborations with outside groups — even if you haven’t yet been issued a patent.

For one, you can use your patent application as leverage in negotiating licensing or cross-licensing opportunities.

For another, you can use the “patent pending” label on your invention once you’ve initiated the patent process. This may offer potential collaborators a degree of objective reassurance that your technology is unique.

IS IT TIME FOR YOUR BUSINESS TO BEGIN BUILDING A PATENT PORTFOLIO?

The patent process is certainly not cheap. But even if you don’t plan to aggressively enforce a patent portfolio, the process of filing and publishing patent applications can bring your business significant value — making it a worthwhile investment in the long run.

Still unsure if filing a patent application is the right step? We’ve put together a free checklist to determine if it’s the right time for you to begin pursuing patent protection. Download it now!