The underlying incentives for all patent portfolios are essentially the same; to maintain and increase future market share, to convert research and development investment into equity, and to avoid expensive patent litigation. These corporate patent goals are most efficiently accomplished by a tried and true patent housekeeping system.
Maintain Market Share
Your existing market share is maintained by preventing competitors from copying your company’s current products. There are only two choices; either file a patent application to own the new product design or dedicate the new design to the public domain upon its introduction, leaving it free for anyone to make and sell, usually without the burden of product development. Placing a product in the public domain not only allows the competition to take away your market share, it also diminishes corporate assets because the company’s investment in product development has also been “gifted” to the public. So long as a corporation is giving away its money to aid competitors, it will never get ahead.
Increase Market Share
A company or business unit normally increases market share with improved and/or less expensive products. After all, a salesperson sells price, quality and delivery. In most instances the quality and delivery are equal; therefore, the driving force of invention in the capitalistic world is usually price reduction, or at least product improvement without a price increase. Of course, good competitors are also striving to make it better and cheaper, but the company that gets in the lead will remain in the lead so long as it does not leave the barn door open by failing to patent the nuances of its products.
Technology moves along in small increments, rarely in flash of genius inventions. Patents are definite signposts of these increments and are, therefore, clear indicators of the health of a technology based company. Investments of venture capital in technology based companies are heavily dependent upon proprietary and patentable products. The patent portfolio remains a barometer as the company matures and is evaluated by Wall Street.
To Avoid Litigation
The best defense to patent litigation is a good offense. An average cost for one party involved in a patent law suit is more than one million dollars. The cost of a single law suit could exhaust the annual corporate patent budget for several years. Business executives are sometimes initially enamored with the prospect of doing battle with their competitors through their attorneys, but soon loose enthusiasm as the monthly legal bills pile up, their corporate financial records are opened to their competition, and their key personnel are tied up in lengthy depositions. The most effective way to avoid this litigation is to consciously remain on the offensive by prudently establishing and maintaining a well balanced patent portfolio.