What is the purpose?
Some common reasons for patenting include:
Some common reasons why patenting takes place are in order to:
- attract investors or potential buyers to the company. It is no secret that many investors like to see an established patent portfolio. Patents provide a certain degree of technological legitimacy, and investors can see the potential for market exclusivity as well as opportunities to generate licensing income.
- secure exclusive rights and gain a competitive advantage, i.e., to be alone in the market with a particular product. A patent grants the holder the exclusive right to commercialize an invention for a limited period, usually 20 years. This means that others cannot manufacture, use, or sell the invention without permission in the countries where the patent is protected.
- license the invention to others in exchange for royalties.
There are clear advantages if the decision to patent serves several purposes. However, before deciding whether patenting is the right path to take, it is worth gaining a clearer understanding of what patent protection actually means and what is required to obtain the protection you are seeking.
What are the prerequisites for achieving that purpose? Do the benefits outweigh the costs?
What does this look like in our industry, and how will patenting the invention be received in the market? Will we gain any competitive advantage, or are there ways to work around the patent and achieve the same effect anyway? Do competitors have other advantages, such as long-standing customer relationships, that could reduce the significance of the patent from our perspective?
In certain industries, and for certain types of products (pharmaceuticals, for example), having a comprehensive patent portfolio is almost a necessity. In other industries, patents do not play such a decisive role. It is therefore important to carefully analyze and understand market dynamics and investor expectations before deciding whether to patent your innovation.
It is easy to be tempted to patent a technology once the company learns that the invention is patentable. But it is important to remember that patenting an invention is costly. And the costs do not stop there. To effectively secure exclusive rights in the market and/or license out the invention, the company must be prepared to bear the cost of enforcing against infringement and defending the patent’s validity if it is challenged (which is far from uncommon).
If licensing is being considered, you should think carefully about who the intended licensees are. Licensing the patented invention to a startup will probably not generate particularly high licensing income, at least not in the short term. If, instead, the licensees are global tech companies, the licensing fees could be significantly higher. At the same time, however, the risk is that such companies may disregard the patent protection and decide to use the invention anyway, especially if they do not believe that your company has the resources to pursue the infringement legally (which can require several years of litigation and be costly for the company).
In summary, it is crucial to think strategically and weigh a range of factors before diving into the patent process. A well-considered strategy can make the difference between success and failure.
Are there alternatives to patenting?
Patents mean that your invention is disclosed and thus becomes available to competitors (although they cannot use your invention until the patent protection has expired or the patent has been declared invalid). If it is possible to keep the invention secret through confidentiality agreements while still exploiting it and achieving a competitive advantage (because competitors fail to understand your brilliant idea and cannot copy it), that may be a better—and likely less costly—alternative to patents. Patents also take a relatively long time to be granted (the Swedish Patents and Registration Office, PRV, indicates a processing time of around two years). If development in the relevant technology is moving very quickly, patenting may not be worthwhile for this reason, since the technology may be outdated by the time exclusive rights are obtained.
If you get stuck on these questions -, contact Synch (mathilda.nordmark@synch.law) to discuss patent strategy further.
To hear more about what iinvestors want to see before you raise capital, contact Synch (sofia.tangelin@synch.law).
