Is it worth getting a patent even if you never intend to assert it in litigation?

by Kathleen Kuznicki, Esq.

picjumbo.com_IMG_5961Yes. Otherwise, if you have desirable and successful invention, competitors will blatantly copy your product because they know there would be no recourse to stop them. Generally, no business wants to go the litigation route to enforce a patent; a business solution is always preferable.  However without a patent, you would have no leverage to even begin a discussion regarding licensing or any other type of settlement. Without a patent you are in a fragile position, and your opportunity for growth may be stunted. If you are developing new products, obtaining patents should be part of your overall business strategy.

A patent puts potential infringers on notice that they could be at risk if they copy your product. Your competitors will not be privy to your predilection against litigation. The act of getting a patent suggests to competitors a willingness to assert it against an infringer. Less than 2% of patent disputes actually go to trial, most disputes, whether filed in court or not, result in a settlement. Every step in the patent litigation process is directed toward and favors settling without a trial, but you need to have a strong litigation position to force a settlement in your favor.

A strong patent reflects a strong litigation position, and a driving factor towards settlement with an infringer is that the cost of fighting will be so significantly higher relative to the cost of settlement. If you have a strong patent, the rational path for a true infringing competitor is to settle the case for a reasonable royalty and/or a cross licensing opportunity; and not risk compounding a settlement to you with their own legal fees, treble damages for willful infringement or possibly your litigation fees. A strong patent can also be a defense buffer against the threat of an infringement as you would have the threat of a countersuit; and your opposition may want to consider a cross-licensing negotiation instead.

Without a strong patent, you will lose the first-to-market advantage, and competitors will catch up and possibly surpass you; ultimately squeezing you out of the market. Competitors who copy your invention will always have the cost advantage. They don’t have research and development expenditures to recover, and may be able to mass produce at a lower cost per unit. Free riding allows competitors to undercut an innovator’s price point. Patents, because of the threat of litigation, are the only thing that keeps the playing field level allowing small inventors to grow their inventive ideas into companies.

Investors demand patents to cover inventions because it makes absolutely no sense to invest in a technology if you cannot own the rights to that technology. It takes a significant amount of time and money to commercialize a product, and if a free rider can come in, copy and commercialize the product at lower cost without any threat of repercussion; an investor will never recoup their money. Patents mitigate some of the risk in investing in start-up companies. If the business does fail, patents are an asset that can be valued and sold, allowing recovery of investments in start-ups.

However, having a patent is not a magic elixir. First the patent needs to be strong enough to withstand the invalidity challenges that are typically asserted by defendants in patent infringement lawsuits. For example, a patent’s claims can be challenged based on obviousness in light of the prior art, indefiniteness in light of the specification, or being non patentable subject matter. If your patent has any weakness, this weakness will transcend your negotiation position and may result in a settlement that is lower than you would like. Second, a large corporation may not be afraid  to take you on because they know that they can protract the litigation, regardless of the merits of your case. This raises the potential cost of the lawsuit to an extraordinary amount, making it too big of a risk for a small business to assert their patent against them in a courtroom, but between companies that are more equivalent in stature, the risk on both evens out and a business solution will most likely be reached.

Getting a patent on your invention is a very significant investment and a decision to pursue should not be made without forethought into how you will commercialize your product and your business strategy. However, if you are building a significant part or all of your business based on an inventive idea, having a patent will provide you with protection and opportunities you would not have otherwise.

For more information on this topic, Kathleen Kuznicki can be reached at kkuznicki@lynchlaw-group.com.
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