Benefits and Risks for Filing a Patent Application

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A. What Are the Benefits of Getting a Patent for an Invention?

After a person invents a product or process, he often needs to determine whether he wants to have a patent. There are various reasons for getting patents.

(1) Get financial rewards. Inventors may get financial rewards from inventions. Professional inventors, may earn a living on loyalties by licensing their inventions to other persons or corporations. Sometimes, an inventor may sell his or her patent for a lump sum of money. The value of an invention may vary greatly. Some may be worthy of millions of dollars while others have little values.

(2) Gaining competitive edge. Corporations use patented inventions to keep themselves in a competitive edge. When a person has a patent, the person has the right to exclude the rest from making, selling and using the patented invention for 20 years from the effective filing date. This right can give a corporation a decisive advantage in competition. The value of such a patent is often priceless. In this technology world, the existence of a corporation often depends upon its intellectual property rights.  Apple’s down turn from its popular Macintosh age was directly a result of its failure to secure IP right on the window menu system. Had Apple won the infringement suit against Microsoft, Apple would dominate the PC world now. Apple’s later recovery is almost due to one successful product: iMac

Inventions not only can make business successful, but also can cause a shift of business paradigm.Xerox started its business from one pioneer patent. Many Japanese watch companies probably thrive upon the free quiz technology, which ultimately wipes out the entire Swiss watch industry.

(3) Early Start Advantages. A person may also use the patent protection to gain early start advantages when her invention is doubtful in merit and cannot be protected as a trade secret. When a corporation sells a product that has a pending patent application, its competitors will hesitate to enter the field because granting a patent would force them to pay loyalties or shut down their production lines. At least, the competitors will spend some time to evaluate the situation before investing a great sum of money on the product. This may give the corporation enough time to dominate the field.  Early start advantages are especially important for products and services that require considerable use training. For example, a complex instrument requires considerable training on operation, and it is hard for end-users to switch to other competitive instruments. Services requiring a great deal of training include operating systems, Internet access, and most software applications. An early-start opportunity allows a corporation to gain a considerable market share before its competitors enter the field.

(4) Reputation and associated opportunities. Another incentive for applying patents is the reputation associated with a patent. In the invention world, patent is probably the highest recognition an inventor can get for his or her inventive skills. Some individuals enjoy this reputation more than direct financial gains. Inventors may also gain indirect financial benefits. Companies, particularly research institutes, value their skills, and treat them more favorably in retaining, hiring and promoting employees. Inventors may have enhanced chances to have other opportunities in business and politics

B.What Are the Risks Associated With Patent Prosecution?

If your motivation is to make money from royalties, you will have two kinds of risks. First, you may be unable to make money because your invention does not attract investors and/or intended users. It is hard to tell from inventive merit. A simple key ring may generate millions of dollars of loyalties, but a highly complicated laboratory instrument makes little money. Inventors may lose money in some situations. The second risk is that an invention may be found to be ineligible for a patent even though the inventor and her patent attorney believe it meets all statutory requirements. This may be the case where the patent examiners find killer prior art (from anywhere in the whole world) that was not found by the inventor's patent attorney or patent search firm. It is absolutely impossible to predict what an examiner will find from the whole world.

By a small chance, a patent may be found invalid when the patent owner enforces her patent right in an infringement suit. One of several possibilities is that the infringing party might find a publication that described prior art that made the invention obvious. Another reason for holding a patent unenforceable is that the infringing party shows that the inventor committed some fraud or inequitable conduct in front of the Patent and Trademark Office during patent prosecution. The infringing party can also escape liability by successfully convincing the court that its product or process is materially different from the patented invention.

If the motivation for applying a patent is to gain competitive advantages, failure to secure a patent or subsequent invalidation of a granted patent might trigger new competition. Nevertheless, the corporation has enjoyed early start advantages, thus does not stand losing everything. However, a corporation should not file a patent application when it is obvious that the invention does not meet the statutory requirements. A good faith belief that the invention may meet statutory requirements is necessary.

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