CareersFebruary 14, 2022
Investing, planning for, and protecting intellectual property may seem like a simple process, however, patenting an invention often takes years to complete. It is an expensive investment businesses and individuals alike undertake not only to try to obtain strong patent protection in the marketplace, but to ultimately add value to their business.
Patents and their rights are a type of intellectual property, which may be sold, licensed, traded, or even assigned. Patent rights are exclusive rights granted for an invention, meaning that a patent holder can exclude others from “making, using, distributing, importing, or selling” products that embody the claimed invention. However, part of the public policy and “bargain” of obtaining a patent is that the inventor discloses the details of the invention in the patent application which is ultimately made publicly available. The level of detail is important in the progression of technology such that others can build upon the publicly available information to make more technological advancements. In exchange for disclosure of information, if the invention is new, useful and nonobvious, the U.S. government grants a 20-year limited monopoly (i.e., a patent) for the disclosure, giving the inventor exclusive rights to the invention.
It is important to note that not all businesses opt to patent their inventions. For example, Coca-Cola has not patented their famous recipe, because if the recipe is disclosed in a patent, then the Coca-Cola family will only have exclusive rights to the patented recipe for the next 20 years. Therefore, some businesses choose to protect their intellectual property as a trade secret. Trade secret protection and overall confidentiality requirements are both valuable considerations to include in a business plan, especially for businesses like Coca-Cola who are relying on trade secret law to protect their intellectual property.
There are several questions a business should consider when determining how a patent fits into a business plan. For instance, is the technology core to the business, and will it offer a competitive edge in the marketplace if patented? Has the business protected all of its intellectual property? Are business competitors trying to sell products similar to the business’s intellectual property? Is the goal of the business to prevent others from commercially making and selling the issued patent? Take Samsung® as an example: Samsung® is a competitor to Apple®. Therefore, it is clearly advantageous for Samsung® to try and acquire rights in most, if not all, of its intellectual property in order to garner its success in the competing marketplace with Apple®. Additionally, Samsung® would likely want to prevent the manufacturing of its inventions rather than the use. Preventing the use of Samsung® products would not be advantageous for the company because the point of the invention was use by consumers. Therefore, it is in Samsung’s® best interest to ensure that its patent claims are crafted in a way to prevent the unauthorized manufacturing of the claimed product. Furthermore, it is in Samsung’s® best interest to acquire rights in its intellectual property so as to gain a competitive edge in the marketplace and avoid the pit falls of possible infringement claims from its competitors.
Patents much like copyrights and trademarks are valuable intellectual property assets that oftentimes may be the determining factor for an investor to decide to contribute to a business. For example, popular television shows encourage entrepreneurs to acquire a patent before promoting their products on the show, because a patent adds a significant amount of value to the proposed business. So, in essence, whether you are a contestant on TV or a business in Cleveland, your patent is an asset and a key tool to consider when approaching investors and promoting your business in the marketplace. A proper business plan creates an objective blueprint that is necessary in marketing business assets. A good business plan will take into account all business assets, both tangible and intangible. Intangible assets include intellectual property.
Since patents can be licensed, sold, and franchised for additional profits they can provide businesses with access to new marketplaces. Therefore, a proper investment plan should also include the type of patent best suited for the invention. There are different types of patents, and the type of patent may matter depending on your market, which ultimately reflects on your business plan. For instance, how a utility mechanical patent compliments a business plan may differ greatly from how a utility electrical/software patent fits into a business plan. Well-drafted mechanical patents and claims may better prevent unauthorized production of an invention that can be physically observed in contrast to some electrical/software inventions that may be difficult to observe and protect with patent protection. However, even with proper drafting, the type of invention matters and should be considered when preparing your business plan.
Alternatively, patents are often used defensively to protect a business from alleged infringement. Failing to acquire rights in your intellectual property could make your business susceptible to a lawsuit from a competitor claiming patent infringement. Such lawsuits are extremely expensive and can be detrimental to your business. This type of expense is often jaw dropping to those facing a patent infringement claim. Therefore, not only accounting for your own intellectual property rights, but the rights of others, are key components for any business plan.
Whether you are new to the marketplace, a longstanding business, or an entrepreneur looking to promote your new business, properly assessing your intellectual property and incorporating these assets into your business plan could give you a significant competitive edge in the marketplace.
If you have questions regarding your intellectual property, filing a patent, or questions regarding the best business plan for your intellectual property, please contact one of our attorneys on our intellectual property team at Walter|Haverfield.
Jamie Pingor is a partner and chair of the Walter Haverfield Intellectual Property Group. He can be reached at 216.928.2984 or at jpingor@walterhav.com.
Kristina Schiavone is an associate in the Walter Haverfield Intellectual Property Group. She can be reached at 216.658.6231 or at kschiavone@walterhav.com.
Rodney E. Haven is an associate in the Walter Haverfield Intellectual Property Group. He can be reached at 216.928.2944 or at rhaven@walterhav.com.