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Top Three Reasons to File a Patent

Keyboard button with the word "learn" on itThere are typically three good reasons to apply for a patent: 1) you want to signal to potential investors/partners that you are serious about your efforts and have something unique enough to protect via patent; 2) your business model depends on licensing technology, know-how and IP; and 3) you will need defensive patents to even the playing field against your competitors. Before filing for a patent, you should consider each of these in determining what you intend to do with the patent application now and in the future.

You want to signal to potential investors/partners that you are serious about your efforts. This is one of the most common reasons for filing a patent application. Interestingly, studies have shown that companies with well-developed patent portfolios are more likely to succeed than those without. That might be because patents provide direct benefits that help companies succeed or for other reasons – such as the fact that a management team is more likely to succeed if it’s got its act together and is savvy enough to be thinking through issues such as IP, or because a company with enough funding to file for patents is more likely to succeed than one that can’t raise the money they need. Regardless, having a considered IP strategy and one or more patent applications pending often signals to your audience that you are serious about your endeavor. This is, however, also a very industry-specific rationale – in some industries, traction / user base / data mining techniques matter more than patent portfolios; in others, patents are mission critical. You will probably have a sense for what type of industry you’re working in based on your early research and competitive analysis.

Your business model may depend on licensing intellectual property. Some inventors develop technology that they cannot take to market but that they intend to license to others who can do so. This may be a tricky strategy from a business perspective because you’ve got to have the connections needed to reach target decision-makers and they’ve got to perceive you as a serious competitor, if not a peer. However, if you are dealing with similarly sized competitors, or have the resources to engage with larger entities, building out the IP portfolio will be extremely helpful. Given that it takes years for an application to make its way through the patent office, the sooner you start, the better.

You need to even up a playing field. Have competitors you know to be litigious or who are extremely active in licensing technology to and from other competitors? A solid patent portfolio may act as a good insurance policy – in the event that you are approached by one of these competitors, having a stable of issued patents will put you in a better position at the negotiating table. And again, since you can’t license or litigate patent applications before they issue, the sooner your start working towards those issued patents, the better.

There are of course plenty of other reasons to file applications. In the same way that a company might hire outstanding coders to build your software assets, for example, some companies invest in building an outstanding patent portfolio. Other people have the resources to file speculative patent applications – essentially gambling that once the technology catches up to them, they’ll be able to find the partners and funding they need to implement and market their innovations. Whatever the reason, think it through before filing, as it may influence how and what you file.

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