In a previous post, I talked about the importance of having an IP Coordinator on the team and how this role fits into an organization.
Part of the responsibilities of such an individual is to ensure that a company is obtaining value when it pays to patent its inventions.
I identified the three principles that apply if the objective is to obtain meaningful patents:
- Right invention
- Right circumstances
- Right procedures
In my last post I addressed right invention. This time I will address the right circumstances.
While a good patent always starts at the beginning with a good invention, the circumstances of the market are equally important to having a successful product. Even if you have a product that will appeal to customers and can be delivered at a price that customers are willing to pay, if there are alternate products already available in the market that are nearly equivalent, then you’re going to have difficulty.
As discussed in the previous article, having the right invention is essential. No patent in the world will be of value if the public doesn’t want to buy the product, or if the product can’t be made at a price that the public is willing to pay. This addresses the consideration of right invention.
Right circumstances refers to the market environment in which the product is to be sold.
How do you define value?
It’s pretty trite when you understand it, but so many product innovators forget this principle. You’re going to have a great deal of difficulty selling a product at a premium price to customers who have the alternative of purchasing a substitute that delivers essentially the same value. The concept of “value” is used in this case to identify the combination of product appeal and price. That’s what is always on every customer’s mind. Patents cannot contribute to preventing competitors from selling already available products.
A patent is about restraining others from selling competing products. But a valid patent can never be issued for something that has already been available to the public. If an alternate product is already on the market and is just as good as what you’re proposing to market yourself, and if the value combination of appeal and price is very nearly the same, then there’s not much scope in these circumstances for making a lot of money.
Even if you obtain a perfectly valid patent in respect of your innovation, a patent can never prevent competitors from marketing anything that was previously available to the public. This includes not only things that someone else has already marketed before, but also anything that has been disclosed or described anywhere in the world. This is the fundamental rule of patent law.
A meaningful patent vs. a publicity patent
So if you have an excellent invention that can be made at a reasonable price but others are selling something that’s equally good, then having a patent isn’t going to help you very much. There is the old saw that you can brag that your product is patented. But a “publicity” patent, because that’s what it is, is not really a meaningful patent. It doesn’t deliver meaningful exclusive rights.
Then there is the prospect in which you have a product that is better than something which is already on the market. This looks like an ideal situation. But what if your competitor has the ability to drastically lower their price once you introduce your new, superior, widget for the benefit of the ever-appreciative public? You have to ask: will I be able to maintain sales if my competitor offers a somewhat similar, if not identical, product at a substantially reduced price? In many cases, this kind of behaviour by your competitors will ruin your prospects for succeeding in the market.
Even if something isn’t already on the market, and even if it hasn’t been described previously somewhere in the prior art, market circumstances may nevertheless make it futile to obtain meaningful patent rights. If the object is to charge higher prices from the fortress of enjoying patent exclusivity, then patent rights are useless if they fail to suppress newly arising competitive alternatives. There is always the prospect that your competitors will come up with something new that will compete.
If you build it, someone will imitate it
Everyone’s heard the expression: “If you invent a better mousetrap, people will beat a path to your door.” This concept is probably not true, as many bitter innovators have learned. But I propose another concept: “If the customers start to buy it, then a competitor will make it.” In the battlefield environment of the contemporary world marketplace this is probably as true a statement as could ever be made.
Accordingly, when you choose your innovation, you must not only look to what your competitors are already doing, but also explore what they might do. That’s what right circumstances is all about. Ideally, your innovation should have a feature that not only has never been adopted or disclosed before, but one that cannot easily be imitated using some alternate technology.
This post has been about the right circumstances for obtaining meaningful patent rights. The right circumstances go with the decision to pursue a specific innovation, an innovation which incorporates the right invention. Both of these issues are requirements for obtaining meaningful patent rights, and I haven’t even yet addressed the third issue, right procedures for patenting. That will be the subject of my next post.
As part of our ongoing series examining the ecosystem necessary to bring technology to market, David French, a senior Canadian patent attorney with 35 years of experience, now provides the fourth of his commentaries on the importance to a company of protecting its intellectual property.
David French is the principal and CEO of Second Counsel Services, which provides guidance for companies that wish to improve their management of Intellectual Property. For more information visit www.SecondCounsel.com.