Top 5 Reasons for Getting Patents

This time of the year it is common to publish lists of everything ranging from the top songs to the top movies to the best and worst dressed people. Last year we published a list of the top 10 misconceptions about patents which we encounter in our work. This year we thought we would provide a list of the top 5 reasons for getting patents.

All patents, and all patenting strategies, are not created equal. A good patent strategy should be well-tuned to a company’s reasons for getting patents in the first place. Here, in no particular order and based on our experience, are the top 5 reasons that companies get patents:

1.  To increase market share through exclusivity

A patent provides a right to exclude others from making, using, selling, offering to sell, or importing the claimed invention. Broad, enforceable patent claims can allow you to reduce or eliminate your competition by forcing your competitors to forego patented features that provide commercial value. As a result, good patents can help increase your market share by providing exclusivity for commercially valuable product features.

2.  To generate licensing revenues

Some companies may not commercialize some or all of their patents. However, they can still generate income by licensing the patents to others who can commercialize them. Although they are somewhat controversial because of the amount of patent litigation they have initiated, certain companies called “non practicing entities” or “patent assertion entities” (or more pejoratively, “patent trolls”) build their entire businesses around licensing patents to others. Companies can also monetize their patents by selling them outright instead of licensing them. 

3.  To build a defensive portfolio

During the Cold War, the U.S. built its military strategy around what was known as the “MAD doctrine,” with MAD referring to “mutually assured destruction.” The idea was that if two superpowers had sufficient arsenals to destroy one another, the prospect of their mutual destruction would prevent either from starting a war. In the patent context, companies who do not necessarily have a desire to obtain or even monetize patents have acquired large patent portfolios so that if they are sued, they can launch an offensive counter-attack by asserting their own claims for patent infringement against their opponent. This was suggested as at least one possible motivation for Google’s acquisition of the Motorola Mobility patent portfolio.

4.   To attract investors

Patents, at least superficially, can be thought of as a government stamp of approval for your technology. Investors may consider the number and quality of a company’s patents as an indicator of the company’s worth and a useful metric for determining whether an investment is likely to pay off. In actuality, patents cover specific inventions that are deemed novel and non-obvious by the Patent Office. Whether the patents actually add value is determined primarily by whether they have claims that are broad and valid. Those details aside, investors seem to view the acquisition of patents as a general indicator of value.

5.   To improve public perception of products

This relates to number 4. Obtaining patents that cover your products allows you to describe the products as “patented.” In the eyes of many consumers, a patent indicates that a product is high quality and/or technologically advanced. This perception can drive sales and increase market share, not because of the legal rights afforded by a patent, but rather, because of the perception that a patent constitutes the endorsement of a technology by the Patent Office. Some companies simply seek “patent pending” status for some period of time, even if they never ultimately obtain a patent, because they believe that the ability to market a product as “patent pending” enhances consumer perception of the product’s value.

When developing a patent strategy, it is important to be mindful of your particular goals in acquiring patents. For example, if your goal is to increase market share through exclusivity, the scope of the patent claims you obtain will be critically important because it will determine whether competitors can design around your patents and still achieve the same basic benefits as your patented products. You may need to fight Patent Office rejections aggressively, and if necessary, file appeals to ensure that you get the broadest claims possible. For non-practicing entities seeking licensing revenues, similar considerations may apply as potential licensees will scrutinize the scope of the licensed claims to see if the claims provide strong exclusivity and a correspondingly strong competitive advantage in the licensee’s markets.

On the other hand, if your patents are used primarily as a marketing tool to improve public perception of your company and products, you may be able to achieve this goal without worrying as much about the details of your patent claims and the ability of competitors to avoid them. It may not be as important to spend money to ensure that your claims are as broad as possible.

Many companies, especially newer ones that may be unfamiliar with patents and the patenting process, seem to enter the patenting process without a clear idea oftheir goals, which can lead them to implement an inappropriate patenting strategy and waste valuable resources that could be put to more productive use. Being mindful of your patenting goals can reduce the likelihood of this occurring.