If you take away one point from this article, I hope it’s that you need to a business plan and a plan for a patent before you file a patent application. Are you ready for a patent? Well, it really depends on your business plan.
Does your business plan make sense?
First and foremost, a person should seek a patent if their business has a revenue generating product and they need to protect that product. Prior to the patent craze of the last decade, protecting a product was the main reason people sought a patent. Today, it’s still the best reason to apply for a patent. A patent is a cost effective tool, but only if it makes you money or protects you from copycats.
An inventor with an idea or a proof of concept doesn’t fall into this category, in my opinion. From an economic perspective, It’s not financially intelligent for a one man shop to file a $10,000 patent application if they have a tight budget and more important expenses like getting their product to market.
This is going to sound contrary to my previous point but you should be thinking about whether a patent is right for you early on. Once you publicly disclose your invention (e.g. by selling it or advertising it), you have one year to file a patent application before you start losing your rights. If you’re currently in the early stages of development, I’d recommend you consider filing a provisional patent application. It’s a cost effective option for young startups.
The second valid reason for filing a patent is a business plan that has become popular in the last decade. A patent can directly add value to your business through a sale of the patent, licensing the patent, or attracting investors. Although this business plan is valid, it needs to be discussed with some tough love.
It’s not a hard and fast rule but this business plan works best in highly technical fields when the invention fixes an existing problem in an industry or pre-empts a market. Patents that fall into this category rarely cover an alternative solution to a problem that has already been solved. To quote Mark Cuban, “When you’ve got 10,000 people trying to do the same thing, why would you want to be number 10,001?”
What does it mean to pre-empt a market? Let’s say you have experience in a particular field and you believe you know where that field is going to be 10 years from now. If you have the technical expertise to design something that will be of value to the field in 10 years, filing a patent application on the invention could be a great idea. If this invention pre-empts the market, that patent could be worth hundreds of times your initial investment.
How do you know if you’re fixing a problem in the market? Well, that’s hard to answer because it’s so case specific. Let’s just leave it at this. An invention that fixes a known problem in the market has a value independent of your company’s product. Go ahead and file a patent application on it. Then seek to license that invention to a company that is in the particular field and can save money if they implement your patented invention.
There are two scenarios that patent professionals see on a regular basis that cause us to cringe. Both of these scenarios illustrate misguided reasons for seeking a patent. The first scenario is when an inventor files a patent application before they have a business plan for the patent. The difference between a person who seeks a patent before they have a business plan in place and a person who seeks a patent after they have a business plan in place, is the same difference as an investor and a speculator. A speculator more often than not loses their entire “investment”. Have a business plan first!
The second scenario is when a scientist seeks a patent for the personal achievement of being able to say they have a patent. Patent agents and patent attorneys regularly have to remind scientists that patents are not peer reviewed publications. The idea of validating one’s invention by attaining is temping, but it should not be the reason for seeking a patent.
Within the next few days I’ll be posting three examples of solo inventors who have successfully sought and monetized their patents. Each of these individuals I have personally spoken with about their experiences, and I believe those experiences will help demonstrate the principles I’ve just discussed. Happy Monday.