The benefits of patenting today can be critical for a company of any size, from nascent start-ups to long established household brands at the top of their market. Merely obtaining a patent--or even patent pending status--can add to a company's bottom line, signal or establish market boundaries, provide leverage in negotiation and basis for licensing deals, support brand development, and myriad other beneficial effects.
In some cases, U.S. patent rights must be enforced in federal court for damages or injunctive relief, or at the U.S. International Trade Commission to help stop infringing goods at the border. Changes in U.S. patent law have made enforcement more challenging in recent years, particularly for average or lower quality patents. Accused infringers typically attack the validity of a patent in trial proceeding at the U.S. Patent and Trademark Office. This has become a go-to move for accused infringers defending against patent infringement claims since U.S. Congress created the Patent Trial and Appeal Board in 2011 and the Inter Partes Review (IPR) process. The IPR process has become heavily and handily relied upon as a defense strategy for accused infringers, for our clients and others. See, e.g., June 2023, Promoting and Respecting Economically Vital American Innovation Leadership (PREVAIL) Act (bill introduced in the Senate (S.2220 and H.R. 4370) to address, among other things, the cost and apparently high invalidation rate (84% of patents actually reviewed) of the PTAB).
The cost of defending a patent in such a proceeding are on top of the already substantial cost of bringing an infringement lawsuit. We excel at controlling and minimizing costs of enforcement, defense, and IPR proceedings. Even so, the benefits of patenting can outweigh the cost of acquisition and risk of unsuccessful enforcement or invalidation. Some of these benefits are identified below.
I. Patents Can Be Critical to Success for Startup Company
Technology and invention is often the core value of a start-up company. Unless you are in the business of producing a new soda flavor, or a recipe or any black box technology that is difficult to reverse engineer, trade secret protection is not the whole answer to properly securing that core value technology. Rather, U.S. law provides patent protection for utility inventions and design inventions in articles of manufacture. Some benefits of patenting inventions for early-stage companies include:
Protection of Innovation: Utility patents safeguard novel processes, machines, compositions of matter, or improvements in these areas, ensuring exclusive rights to the inventor for a set period.
Market Advantage: For startups with innovative products or methods, utility patents provide a competitive edge by preventing competitors from using, making, or selling the patented invention without permission.
Attracting Investors: Having utility patents can enhance the value proposition for potential investors or stakeholders, showcasing the startup's commitment to innovation and protecting its core technology.
Market Entry: In crowded markets, utility patents help startups establish a foothold by providing legal protection against larger competitors.
Monetization: Startups can license or sell their patented technology, creating additional revenue streams and fostering collaborations or partnerships.
II. Utility Patents Can Be Critical to Patent Portfolio of Established Companies
These days many of the established businesses that come to us already recognize a value in having a patent portfolio, but may not recognize the value, for example, in growth even outside of planned business ventures or product lines. For established companies, growing the patent portfolio can have the following benefits:
Preserving Market Position: For established companies, utility patents maintain market dominance by protecting core technologies and preventing competitors from encroaching on their territory.
Defensive Strategy: They serve as a defensive mechanism against potential infringement claims from competitors.
Leverage in Negotiations: Utility patents provide leverage in negotiations, collaborations, or mergers and acquisitions, strengthening the company's position in discussions with partners or investors.
Innovation Continuity: Companies at this stage often invest in ongoing R&D; utility patents secure ongoing innovations and ensure long-term competitiveness.
Brand Protection: For companies with established brands, utility patents safeguard their unique processes or technologies, contributing to brand integrity and market presence.
Utility patents are crucial for both startups and established mid-market companies. For startups, they offer a competitive edge, attract investors, and protect innovative ideas during market entry. For established companies, they maintain market dominance, serve as a defensive strategy, and support ongoing innovation efforts. In both cases, utility patents play a pivotal role in safeguarding intellectual property, fostering growth, and enhancing the overall value proposition of the company.
Do the potentially high cost of litigation and risk of invalidation of the PTAB weigh against patenting? No, instead these factors require better patents and careful budgeting, and approaches to enforcement that minimize costs and avoid protracted litigation and trial. Now more than ever before in the history of the U.S. patent system unwavering attention to quality and craftsmanship in patent drafting and prosecution is required to minimize enforcement costs and enhance changes of successful enforcement and successful validity defense at the PTAB in IPR proceedings.
Contact us if you have questions about strong patent protection at email@example.com.