Intellectual Property Strategy

Entrepreneurs and businesses alike wrestle with the question of patents. Patents can be an accelerator or a hurdle as new products and technology travel through the pipeline and approach the market.

The U.S. Patent and Trademark Office is inundated, resulting in added expense and time. Current estimates figure an average of five years and $20,000 before the patent might clear. Many wonder whether it is worth the effort.

The short answer is you should do everything in your power to lock up your opportunity for exclusive distribution. This gives you a leg up in the market for a period of time and can be a salable asset.

Start by defining your end game: Are you launching the new product to grow your existing business or is your intent to use this new product to make your company attractive to strategic acquirers? If your objective is the latter, patents are a box that you need to check.

Typically, investors and potential acquirers like to see some form of intellectual property in place, whether it be patents, exclusive licenses to patents or, to a lesser degree, exclusive distribution agreements and a well-protected trade secret like the secret sauce in Coca-Cola. Patents are a salable asset just like your infrastructure, contracts and brand. If your intent is to grow the business, it is good to have a solid IP strategy as it will increase the value of the company and increase leverage in the event a sale becomes a necessity rather than an option.

Even you do not intend to file for a patent, it is important to do a comprehensive intellectual property search. Competitive analysis to determine if a solution already exists is part one. Part two is ensuring that there are no pre-existing patents. The vast majority of issued patents are not actually commercialized in the market yet can sue for patent infringement.

Now, practically speaking, is an IP strategy bulletproof, assuring your market dominance? Absolutely not. Companies are often lured into a false sense of security with patents. They become complacent and lose their R&D and innovation focus that drives iterative improvements that ensure they meet market demand. This opens the door for more aggressive companies to launch innovations that render previously patented products obsolete. Larger companies move in for market share, often ignoring patents and license agreements using their deeper pockets to drown their opponent in legal fees.

The only way to develop a sustainable competitive advantage is through a well-differentiated brand. The brand is what ties the legacy and new products together and positively imprints the buyer’s mind. If done right, this is the one thing that competitors cannot take from you.

If you are lucky enough to corner the market, know that your days on top are limited. Competitors will move in and either best your offering or commoditize the market. In either case, your best strategy is an established brand with tenets that foster loyalty.

Once you are in the market the clock starts. You must work to stay on top. Do not rest on the shoulders of your aging patent.