Small Business Intellectual Property
do you Turn Inventions Into Profitable Assets of Your Small Business?
regarding small businesses and intellectual property are frankly difficult for
many small businesses. As is usually the case there are tradeoffs between
benefits and the cost of getting those benefits. Protecting intellectual
property is not free!
obtaining and working with patents is one of the more expensive aspects of
small business intellectual property, let’s talk about patents. We can start
with some reasons why small businesses might consider actively patenting their
Reasons for Patenting
A stronger market position – the right normally
attributed to a patent is the right to exclude. A patent can give you the
right to exclude others from practicing that same invention, thereby
reducing competition and establishing yourself in the market as a
returns on investments - Having invested a considerable amount of money
and time in developing innovative products, your small business could, under the umbrella of
these exclusive rights, commercialize the invention enabling your small business to obtain higher returns on
to license or sell the invention -
If you chose not to exploit the patent yourself, you may sell it or
license the rights to commercialize it to another enterprise which will be
a source of income for your small business.
licensing - If your small business is in the process of
acquiring the rights to use the patents of another enterprise, through a
licensing contract, your patent portfolio will enhance your bargaining
power. That is to say, your patents may prove to be of considerable
interest to the enterprise with whom you are negotiating, and you could
enter into a cross licensing arrangement where, simply put, the patent
rights could be exchanged between your enterprise and the other.
image for your small business - Business
partners, investors and shareholders may perceive patent portfolios as a
demonstration of a high level of expertise, specialization and
technological capacity within your small business. This may prove useful
for raising funds, finding business partners and raising your company’s
Some of these
things may seem subjective and arbitrary but they are real.
So let’s ask a different question - what happens if your small
business does not Patent their
What Could Happen If Your Small Business Does Not Patent?
else might patent them - In many
countries, the first person or company to apply for a patent for an
invention will have the right to the patent. And if you have not already
commercialized the invention this could mean that someone else may patent
and commercialize and legitimately exclude your small business from the
market, or ask your small business to pay a
licensing fee for using the invention.
to license, sell or transfer technology if you decide to sell your
business will be severely hindered without
intellectual property rights. Transfer of technology presupposes
ownership of a technology which can only be effectively obtained through
appropriate IP protection. Patent protection, is crucial for acquiring
technology through its licensing.
will take advantage of your invention
- If the product is successful, many other competitor firms will be
tempted to make the same product by using your invention but without
having to pay for such use. Larger enterprises may take advantage of scale
economies to produce the product more cheaply and compete at a more
favorable market price. This may considerably reduce your company’s market
share for that product. Even small competing enterprises can produce the
same product and often sell it at a lower price as they do not have to
recoup research and development costs incurred by your small business.
Think about these things. We believe these considerations should be taken into
account by any small business in thinking through how they intend to use
intellectual property. The considerations are not trivial and sometimes it can
be useful to consult with skilled people who have been down this road before.