A patent is a legal document that protects an invention from being copied by other businesses to reduce the risk of competition with a similar product in the future.. Obtaining and enforcing a patent can make a significant difference to the profitability, valuation, and long-term success of any company. By filing for patent protection, you can ensure that your invention is protected from illegal duplicates and any infringements are dealt with legally in courts.
Here are some reasons why you need a patent.
If you can show a patent or a patent-pending to a funding source, like venture capital, it is much easier to secure the funding. With a patent, investors are convinced that you are invested in your business and willing to put your own time and resources into it.Venture capital is funding provided to startups or small businesses that have the potential for fast growth. It is often provided by investment banks, trust funds, private investors, and other sources.
Having a strong portfolio of products and patents helps to increase your company’s valuation. This will give you leverage when you discuss funding opportunities with angel investors, venture capitalists, and private equity firms.
A diverse intellectual property (IP) portfolio are intangible assets that consist of patents, trademarks, copyrights, and trade secrets. They lack physical form but possess high value in form of written documents or concepts.
These intangible assets are often the most important portion of a company’s valuation, especially in the high technology industry or consumer products. A strong IP portfolio is key to obtaining investors, leveraging business transactions, increasing the value of a company in mergers and acquisitions, and providing a larger sum as an exit strategy. Often, between 50 – 90 percent of a Fortune 500 company’s value consists mostly of intellectual property. The sale of patent portfolios is a very profitable venture.
Your patented product is the only one of it’s type available to your target audience. This permits your company to establish the market price, whether it’s a device or a technology. Companies that are first to market with a patented product are often seen as trusted experts and innovators in the field, consequently creating brand loyalty and reliability for which buyers will pay a premium.
Patents block others from entering the market with similar products that would compete with yours. By creating this barrier, you have a chance to compete against large corporations. Even the smallest of start-ups can own more market share than a large corporation. Normally, a large corporation would have a substantial advantage over a new start-up with an invention, but having a patent increases your chances of keeping large corporations with extensive marketing and manufacturing budgets from using your idea.
Patent costs can vary considerably based on the intricacy of the patent. The more complex an idea of invention, the higher the cost of the patent. First, you want to do a patent search to ensure you will not be subjected to a patent infringement lawsuit. A patent search also tells you if the product is unique enough for USPTO criteria. Often people think something is unique, but from the perspective of the US Patent Office, that may not be the case. The smaller investment of running a patent search will determine whether you have something patentable before you move on to the more expensive patent application.
While the costs seem high, patents will eventually make you more money compared to how much they cost you. A good idea will often have competitors flocking to the market with their versions of the product. This fear that competitors will copy their ideas will urge inventors and companies to consider applying for a patent with the United States Trademark and Patent Office (USPTO).