Intellectual property (“IP”) can be a valuable business asset but securing rights to the IP can also be a drain on limited corporate resources. Developing a plan for IP in advance is prudent and can help your company more efficiently allocate resources. Unfortunately, many inventors and small businesses don't plan for IP as well as they should. Working with professional service providers who have first-hand experience with IP creation, commercialization, licensing, and business growth can help better plan how to leverage the IP.
Most people understand that patents are valuable assets but often overlook trademarks, copyrights, and trade secrets as valuable parts of a company’s overall IP portfolio. It is important to look at all forms of IP, not just patents, when considering IP assets. We have all heard about companies with staggeringly successful exits with little, to no revenue. These companies typically had well defined IP and a solid IP plan to offer their acquirer.
Inventors and small companies often look for ways to replicate the model and have successful exits early in the business cycle. For many, the first thing that comes to mind is to file for a patent, and then build a prototype product or license the patent to benefit from a wildly successful early exit.
Less obvious are the reasons that a patent by itself may have little, if any, value. Legally, a patent provides the right to exclude others but does not provide any affirmative rights for the patent holder. Additionally, just because a company has a patent does not mean the company has the skills to commercialize the cover invention. In other situations, the product might be novel, but the market might not be ready for the benefits it provides. Alternatively, the idea might be timely but the patented idea is never built into a product by the patent holder or the party who licensed the patent.
Without an IP plan that covers the development and commercialization lifecycle of the patent, you may find that your patent drives far less revenue than you expected. The reasons why the company generated less revenue than expected may not be blatantly obvious.
Following are 3 ways to improve the potential value of your IP, including patents.
#1: Make Conscious Business Decisions About IP
No one makes an unconscious business decision about IP, but they do make decisions that have unknown, unintended, or misunderstood consequences which they often regret later. For example, you could disclose what you intend to later patent at a trade show or sell a functioning early design of a product you plan to patent as you are excited about the business opportunity. However, these types of public disclosures typically prevent a patent from later being granted.
It is important to think through when, how, and where you inform the world of your new invention as the nature of everyday business combined with fund raising efforts create multiple opportunities for unintended consequences related to IP.
#2: Have a Plan
Just because you've filed for a patent, or even have several issued patents, doesn't mean you have an IP plan in place. A good IP plan includes an inventory of what you have, what you need, and identifies any licenses needed related to third-party IP. Your IP plan should also address trademarks, copyrights, and trade secrets. When developing your IP plan, try to think through the lifecycle of the underlying technology in order to maximize the protection received from your IP.
If you're planning to file international patents, remember to budget for the costs associated with filing patents overseas. Quite often, international patents will be part of the business plan, but their associated costs are not always accurately included in the financial plan.
Another common pitfall is overlooking what it's going to take to bring products protected by patents to market. Will you need a team of engineers, space to develop the product, equipment, or are you going to license your IP to another business that will build products instead?
#3: Get Help Early On
A few hours spent with a business attorney, not just a patent attorney, who understands and works with clients on multiple types of IP and also has business and commercialization experience with IP can help minimize the risks and headaches associated with IP filings. Seasoned executives in companies with extensive IP portfolios understand the value of an overall IP plan. Inventors and small business owners tend to focus on obtaining a patent rather than how their IP should be protected and how their IP relates back to their overall business.
A good attorney, especially one with business and IP experience, can help you understand the potential associated with your IP and how to maximize the value of your IP in moving your business forward. That may mean pointing out additional risks you hadn't consider, explaining the scope of licensing options, drafting licensing terms, and helping you assess the value of your IP.
Great inventions should be protected. Great inventions should also be successfully commercialized.
If you have IP you think is worth protecting, you're wise to get seasoned advice as soon as you can to help avoid many of the common mistakes inventors wish they'd considered earlier.